Gulf to use more Chinese Yuan – HSBC
One step was taken in January last year when the central banks of China and the United Arab Emirates signed an agreement allowing them to swap 35 billion yuan.
April 9, 2013 10:31 by Reuters
Changing trading patterns and pressure to improve profit margins will boost the Gulf’s use of the Chinese yuan in coming years, the head of banking giant HSBC’s China operations said on Monday.
Gulf Arab countries have lagged many other parts of Asia in using the yuan because their oil exports to China are denominated in U.S. dollars and most of their currencies are pegged to the dollar.
HSBC estimates 10 percent of China’s international trade is conducted in yuan, a ratio which it expects will rise to 30 percent by 2015. The share is under 4 percent for Chinese trade with the United Arab Emirates, which imports many goods for on-shipment to other countries in the Gulf.
But Helen Wong, chief executive of HSBC China, said she was seeing growing interest within China in using the yuan instead of the dollar for non-oil trade with the Gulf.
A wider range of smaller Chinese companies are becoming involved with the Gulf, and in contrast to big state-owned firms which are accustomed to processing dollars, the smaller firms want to use the yuan to minimise costs and currency risk, she said.
“Customers are telling us that they are willing to give discounts if the payment is in RMB,” Wong said in an interview while visiting Dubai to promote HSBC’s yuan services to local businessmen.
Rising Chinese labour costs are also increasing interest in the yuan by compressing profit margins, making savings gained through the currency’s use more important, HSBC officials said.
The bank said on Monday it was launching yuan account services in Qatar, Bahrain, Kuwait and Lebanon, allowing clients in those countries to settle cross-border trades and make term deposits in the currency. It was already offering the accounts in the UAE and Saudi Arabia.
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