Malay, Singaporean banks tie-up for yuan trade

Hong Leong Bank partnered with the Industrial and Commercial Bank of China in Singapore to offer trade settlement services in Yuan. This is part of China’s plan to make yuan convertible.

In early July, China has decided to allow the greater use of the yuan in international trade as a first step to make the yuan global.

To date, a selection of enterprises in China has been allowed to participate in this pilot yuan trade settlement programme. Provincial-level governments of selected pilot areas will coordinate with relevant agencies in their localities to recommend pilot enterprise candidates for these yuan cross-border trade settlements.

At present, the pilot cross-border trade services are applicable to selected enterprises and restricted to Shanghai, Guangzhou, Shenzhen, Dongguan and Zhuhai.

"This move to settle trade transactions in yuan will help enterprises manage their costs more efficiently especially in the area of foreign exchange," said Yvonne Chia, Group Managing Director, Hong Leong Bank. "Malaysian companies will now have the convenience of settling trade payments in yuan directly with their counterparts in China ultimately reducing their dependence on the US dollar. The ease of settling trade payments in yuan will further boost the foreign trade growth between China and Malaysia."