China, UAE Sign 35 Billion Yuan Currency Swap (Jan 2012)

Renmimbi-Yuan

Source: Reuters – China, UAE sign 35 billion yuan currency swap

Notable Excerpts:

“China and the United Arab Emirates on Tuesday signed a currency swap agreement worth 35 billion yuan ($5.54 billion)…”

The agreement signed in Dubai was announced while Chinese Premier Wen Jiabao tours the Middle East, including the Emirates, and is the latest in a string of arrangements to facilitate greater use of China’s yuan in international trade.

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 yuan for the direct settlement of international trade. Other countries that have signed such deals recently include Thailand and South Korea.

Beijing’s long-term ambition is to unseat the dollar as the dominant unit of international settlement for cross-border trade in goods and services, especially now that China is the world’s single largest exporting nation and the second largest importer.

Internationalizing the use of the yuan in trade would also strengthen the case for the Chinese currency to be included in the basket of key settlement currencies that the International Monetary Fund uses in its Special Drawing Right unit of account.

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