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Shanghai to Let Banks, Companies Use Offshore Yuan for Investment in Trial
Shanghai will allow banks and companies based in the city to use offshore yuan for investment in a trial program, according to a statement on the local government’s website.
The city will allow yuan settlement for project financing, direct investment and other transactions under capital accounts that are “closely” related to trade, said the statement dated Aug. 9 and posted online today.
“The measure is meant for expanding investment channels for offshore yuan holders,” said Zhang Zhiming, head of China research at HSBC Holdings Plc in Hong Kong.
China started a program of letting companies use yuan in foreign trade settlement in July 2009 as it seeks to reduce reliance on the U.S. dollar and promote the role of its currency in Asia’s goods and services transactions.
Cross-border trade settled in yuan more than doubled to 48.7 billion yuan ($7.2 billion) in the second quarter from the first, central bank data showed.
In the past two months, China also started yuan spot trading versus Malaysia’s ringgit, allowed offshore trading of the yuan in Hong Kong and announced the opening of its bond market to foreign banks.
--Belinda Cao. Editors: Simon Harvey
To contact Bloomberg News staff for this story: Belinda Cao in Beijing at +86-10-6649-7570 or lcao4@bloomberg.net
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