BANGKOK, June 2 – Increased confidence in the yuan means the Chinese currency will play a more central role in international trade, according to Kasikornbank, Thailand’s second largest commercial bank.
Backing away from the US dollar, on Wednesday the bank advised its clients to rely upon the yuan as the major currency for export and import transactions with China to reduce risks from currency fluctuation.
KBank’s Capital Markets Business Division chief Thiti Tantikulanan said China now has a more important role in international trade because its economy has become the world’s second largest.
Simultaneously, trade activity between China and Thailand has continued to grow.
Last year, bilateral trade surged by 28 per cent, which resulted in China becoming Thailand’s largest export destination and second largest import market. Trade with China totaled Bt1.45 billion with exports and imports valued at Bt678.63 billion and Bt775.45 billion respectively.
Because of this, he said, the Chinese yuan is likely to play a more active role in international trade since the Chinese government has a policy to encourage capital outflow.
At present, the yuan amount issued by Beijing offshore, particularly in Hong Kong, is high enough to stimulate exchange or trade transaction in the yuan denomination.
Also, he said, Beijing targeted encouraging the yuan to have an important role in Asian financial markets and worldwide, along with the US dollar, the euro, and the Japanese yen.
Beijing recently designated Hong Kong as an offshore yuan exchange market which could facilitate the use of its currency for payments in international trade, fund mobilisation, investment, and various financial transactions. (MCOT online news)
