Trade
6 years ago

Banks now can open FX clearing account in yuan

Reuters file photo used only for representation
Reuters file photo used only for representation

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The central bank has allowed banks to open foreign currency clearing account with Bangladesh Bank (BB) in Chinese yuan renminbi to facilitate bilateral foreign trade, officials said.

The BB issued a notification in this connection on Tuesday and asked all authorised dealers (ADs) of foreign exchange in Bangladesh to follow the latest instructions.

"It has now been decided that ADs may open foreign currency clearing account with Bangladesh Bank in yuan renminbi too," the BB said in the notification.

The banks had earlier allowed maintaining foreign currency clearing accounts with the central bank in US dollar, pound sterling, euro, Japanese yen, and Canadian dollar.

"We've allowed the Chinese currency for opening foreign currency clearing accounts with us after recommendations from some banks," a BB senior official told the FE.

Some Chinese suppliers or exporters impose pre-condition on opening LCs with yuan instead of other internationally usable foreign currencies, according to the central banker.

"The banks are now allowed to open LCs easily with yuan," the BB official said.

The banks may also make payment for importable products with the Chinese currency if they maintain accounts with overseas banks in yuan, he added.

The International Monetary Fund (IMF) has already included the Chinese currency in its currency basket - SDR (special drawing rights), another BB official said.

He also said the value of SDR is based on the exchange rates of five major currencies - the US dollar, euro, yuan, Japanese yen, and British pound sterling.

The BB's latest move came against the backdrop of China being the number one importer for Bangladesh.

Bangladesh imported goods worth US$ 10.19 billion, from China, which was 25.2 per cent of total imports of the country during fiscal year 2016-17.

Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), welcomed the move, saying that it will help boost foreign trade between the two Asian countries.

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