Currency swaps through RMB Clearing Centre up 42% in H1 2018

Dubai

Currency swaps through the Renminbi (RMB) Clearing Centre in the UAE grew 42 per cent in the first half of 2018, compared to year-end 2017, according to the Central Bank of the UAE.

As part of joint efforts to foster a closer trading relationship and develop increased investment opportunities, the UAE Central Bank and the People’s Bank of China signed a bilateral currency swap agreement and an MoU to establish a Renminbi (RMB) Clearing Centre in the UAE in December 2015.

According to a UAE Central Bank statement, China is the UAE’s largest trading partner, accounting for 12 per cent of total imports to the UAE, with a total value of Dh79.9 billion in 2017, a growth of 14.7 per cent from 2016.

China also accounted for 3.3 per cent of total UAE non-oil exports with a total value of Dh5.1 billion in 2017. The UAE also hosts over 4,000 Chinese firms operating in the UAE and a large community of Chinese expats in the UAE.

Growing transfers through the RMB Clearing Centre is seen as a reflection of the continued overall growth in trade between the two countries.

“The UAE and China are exploring numerous ways to further promote bilateral ties and strengthen cooperation across different sectors including economic, trade, investment, education, tourism and renewable energy. The RMB Clearing Centre has greatly enhanced the ability of our two nations to trade efficiently as reflected by the growing value of trade, investments and other financial flows,” Mubarak Rashed Al Mansouri, UAE Central Bank Governor, said in a statement.

Apart from cross-border clearing and remittance services, the RMB Clearing Centre also provides RMB buying & selling, money market lending and international trade support between the UAE and China. These services have strengthened the ability of local and international financial institutions and economic stakeholders in both countries to do business more efficiently.

“The establishment of the Center has facilitated the clearing process and increased the attraction of the UAE market for Chinese investors and companies to trade in the UAE and vice versa. China is our largest trading partner, indeed, our trade and investments relationship with China continue to grow rapidly, as evidenced by the growing trade and clearing values,” Al Mansouri said.

China has signed a series of currency swap agreements in recent years with key trading partners in a bid to boost the use of the RMB for the direct settlement of international trade. Bankers say the scope of offshore RMB settlements are fast catching up as demand for foreign direct investments into China and RMB denominated fund raising from the international markets are gaining momentum.