Qatar launches first Yuan hub
Move to facilitate cross-border renmimbi investment, financing business while boosting trade links with China Much at stake $ 11.5b Trade between China and Qatar from 2008 to 2013. $5.6b Currency swap deal signed by China and Qatar.
Qatar opened the Middle East’s first centre for clearing transactions in the Chinese yuan yesterday, saying it would boost trade and investment between China and Gulf Arab economies.
“The launch of the region’s first renminbi clearing centre in Doha creates the necessary platform to realise the full potential of Qatar and the region’s trade relationship with China,” Qatar’s central bank governor Shaikh Abdullah Bin Saud Al Thani said at a ceremony.
“It will facilitate greater cross-border yuan investment and financing business, and promote greater trade and economic links between China and the region, paving the way for better financial cooperation and enhancing the preeminence of Qatar as a financial hub in Mena (Middle East and North Africa).”
Industrial and Commercial Bank of China’s (ICBC) Doha branch is the clearing bank for the centre, which intends to serve companies from around the Middle East.
A clearing bank can handle all parts of a currency transaction from when a commitment is made until it is settled, reducing costs and time taken for trading.
At present, Qatar and the Gulf’s other wealthy oil and gas exporters use the US dollar much more than the yuan. Most of their currencies are pegged to the dollar, and most of their huge foreign currency reserves are denominated in dollars.
This is largely because their energy exports to China are mainly denominated in dollars, the currency of choice in oil and gas trade. The yuan is not a fully convertible currency, limiting its attraction for use in central bank reserves.
But the Gulf’s non-oil imports from China have been growing rapidly, and banks servicing the trade may want to use Qatar’s clearing centre rather than having deals cleared in Shanghai or Hong Kong. Total two-way trade between China and Qatar tripled between 2008 and 2013 to around $11.5 billion (Dh42.2 billion).
Last November, the Chinese and Qatari central banks signed a 35 billion yuan ($5.6 billion) currency swap deal, equal in size to a three-year currency swap agreement inked between China and the UAE in 2012.