• Home
• Financial Services
• News Article

HSBC offers yuan accounts in UAE

Friday, Jul 22, 2011

Gulf News
Dubai: HSBC has started offering dedicated yuan accounts (RMB accounts) at HSBC branches throughout the UAE, the bank said yesterday.

This move means that UAE-based customers will be able to trade with China, subject to People’s Bank of China rules, and receive — as well as pay — in yuan without having to convert their currency exposure, helping them lower their trading costs, reduce foreign exchange risk and strengthen their relationships with Chinese partners.

“Our trade research tells us that the yuan has already overtaken the pound in its use as a settlement currency and traders are telling us that they expect it be one of their top 3 settlement currencies this year. And, as trade with Asia increases, so does global interest in this important currency,” said Nicholas Levitt, Head of Commercial Banking for the UAE.

Cutting dollar exposure

Previously, settlement in yuan for cross-border trades was only permitted between five pilot cities in mainland China, Hong Kong, Macau and the member countries of the Association of Southeast Asian Nations.

In June 2010, the People’s Bank of China, China’s central bank, opened the programme up to a further 20 provinces as well as countries around the world.

China, which is seeking to reduce reliance on the US dollar in trade and investment, started to allow businesses to use yuan in cross-border trade in July 2009.

Last year, China has started yuan spot trading versus ringgit, allowed offshore trading of the currency in Hong Kong and announced the opening of its bond market to foreign banks.

Last year, China’s total trade volume was just over 20 trillion yuan, of which just 506 billion was settled in yuan. In the first half of this year alone, 360 billion yuan of China’s total trade was settled in domestic currency.

“Given the rate of trade growth with China, we predict that more than half of the trade between China and emerging markets will be settled in yuan in the next two to four years — our customers need to be ready for this,” said Levitt.

“The trade opportunity is there — the World Trade Authority put the UAE fourth in a list of new primary exporters of commodities. Conversely, China comes in at third highest net importer. Customers need a bank that’s represented in both the developed and emerging markets and can help then connect the two,” said Natasha Patel, Regional Head Global Payments and Cash Management, HSBC .

By Babu Das Augustine, Deputy Business Editor

© Gulf News 2011. All rights reserved.