Kippreport explores the technology that’s currently trending at GitexOctober 7, 2015 3:08
Gulf Arab interest in Chinese Yuan rises –Standard Chartered
Gulf Arab states are increasingly using the Chinese yuan for trading as China accounts for a growing share of the region's exports, and given volatility in major currencies, a senior executive at Standard Chartered said on Tuesday.
May 17, 2012 11:21 by Reuters
Gulf Arab states are increasingly using the Chinese yuan for trading as China accounts for a growing share of the region’s exports, and given volatility in major currencies, a senior executive at Standard Chartered said on Tuesday.
“We are seeing an increasing interest from the GCC (Gulf Cooperation Council) in renminbi,” said Farooq Siddiqi, managing director for transaction banking at Standard Chartered.
“That’s mainly due to increasing trade between both sides and the need to hedge against dollar exposure,” he told reporters at a roundtable event in Dubai.
Gulf states are increasingly selling hydrocarbons to Asian countries like Korea, China and India, compensating for a decline in such trade with Iran following the introduction of new sanctions.
“The Gulf states are shifting their focus towards Asia and Africa, away from the historic trade partners of U.S. and Asia,” said Siddiqi.
The Gulf region has a long history of trade with Iran, and its banks had been expected to step up such financing after the sanctions imposed over Iran’s nuclear programme banned European Union lenders from doing so. But the central banks of UAE and Qatar have told lenders to stop financing trade with Iran.
More than 9 percent of global trade with China, worth around $330 billion, is denominated in yuan, said Juten Arora, managing director and global head of sales for transaction banking at Standard Chartered.
“This is expected to hit $1 trillion in 2020 at a growth rate of 15 percent,” he added, saying double-digit growth in yuan-denominated trade with China was plausible this year.
China’s cross-border yuan trade settlements fell to 196 billion yuan ($31 billion) in April from 261 billion yuan in March, its central bank data showed.
China is the largest consumer of energy resources produced by the Gulf Arab oil exporting region, and the largest source of imports for the Gulf Cooperation Council, United Arab Emirates Foreign Trade Minister Sheikha Lubna al-Qassimi has said.
The annual volume of Chinese exports to the Gulf region has risen more than ten-fold over the last decade to reach approximately $60 billion last year, she said last month.
In January, China, a relatively modest importer of UAE crude, signed a three-year currency swap agreement with the country worth 35 billion yuan ($5.5 billion), its first in the Middle East, in a move to boost two-way trade and investment.
In the first 11 months of 2011, trade between China and the UAE grew to $32 billion in value, up 38 percent, according to Chinese customs data. Chinese exports to the UAE, worth $24.3 billion, dominated that trade.
Dubai’s Emirates NBD bank sold the region’s first offshore Chinese renminbi-denominated bond in March.
($1 = 6.3215 Chinese yuan)
(Reporting by Mirna Sleiman; Editing by Catherine Evans)