Dubai: The Dubai International Financial Centre (DIFC) is working towards becoming the Middle East's clearing hub for offshore yuan transactions, DIFC officials said on Thursday.
The move comes as the Chinese currency is increasingly gaining popularity as a global currency. The change would represent an important step in China's drive to encourage international use of its currency, since the UAE is one of the world's top five oil exporters and the second largest Arab economy in the Gulf.
Bankers said the plan is in the final stages and the financial centre is likely to start yuan transactions as early as this year, subject to regulatory clearances. Once the yuan settlement comes into force, it will allow financial institutions operating in the DIFC to settle their transactions in yuan along with other international currencies such as the dollar and euro.
Statement
"We are working on a plan to become a clearing hub for yuan settlements in the Middle East by 2015. I can't say when exactly we will start clearing in yuan," said Dr Nasser Saeedi, chief economist of the DIFC.
The GCC has been rising in stature as a major trading partner for China with Saudi Arabia and the UAE among its top 20 major trading partners.
According to a recent study by the DIFC, it is in the GCC's strategic interest to move towards greater economic and financial integration with China through free trade agreements, establishing links between financial markets, finance bilateral trade using the yuan and establishing yuan swap lines with GCC central banks.
