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'Bigger yuan role in trade settlements'
Publication Date : 09-11-2012
HSBC foresees an increasing role of the yuan for trade settlements between China and the rest of Asia and emerging economies.
For the first half of this year, 10 per cent of Chinese trade settlement was done in renminbi, Huynh Buu Quang, HSBC's head of global trade and receivables finance Asia-Pacific (international), said yesterday.
China's total international trade last year was worth US$3.5 trillion (108 trillion baht), and about 10 per cent was settled in its own currency, the renminbi or yuan, he said.
By 2015, yuan settlement is expected to count for one-third of China's total trade value, estimated at $6 trillion, he said.
As China's trade with emerging economies increases to $2 trillion by 2015, yuan settlement is expected to account for more than 50 per cent, he said. "The renminbi is playing an increasingly important role."
He said Chinese exporters and importers used the yuan to hedge against foreign-exchange risk rather than for speculation. That is the right behaviour, he said, rather than the common practice of money speculation among businesses in other countries.
Chinese traders usually offer 3-per-cent discounts on their goods to help trade counterparts manage foreign-exchange risk, he said. Usually counterparties do not have instruments to hedge against forex risk when they engage in yuan settlement because of restrictions imposed by Chinese authorities.
HSBC estimates that yuan will be 6.30 per US dollar in this year, as the year 2013 yuan 6.22 per US dollar.
Quang said HSBC had capacity to provide yuan trade financing and hedging tools as the bank has a strong presence in Hong Kong, the only offshore yuan market, he said.
He was upbeat about increasing trade in Asia and the Pacific over the medium and long terms. Through 2016, trade in the region will grow by 5.4 per cent annually, he saidBetween now and 2026, trade in Asia will grow 129 per cent, outpacing global trade growth of 98 per cent, he said. In the same period, Thailand's trade will expand 160 per cent.
He said that Thai exports to China will expand 8 per cent. Among Asean, Malaysia will be remained largest trade partner with Thailand.