12:00 AM, August 15, 2018 / LAST MODIFIED: 12:00 AM, August 15, 2018

Banks can now open clearing accounts in yuan

Bundles of 100 yuan notes are seen at a bank in Shanghai on August 8. Photo: AFP

The central bank yesterday allowed banks to open foreign currency clearing accounts in yuan in keeping with the soaring trade with China.

China has been the largest source of import for Bangladesh since fiscal 2006-07.

Imports from China account for $15 billion of the $16 billion annual trade between the two countries, according to a Reuters report in April.

Thanks to latest move, banks will be able to settle imports from China easily through the clearing accounts.

At present, banks can open such accounts in US dollar, British pound, Euro, Japanese yen and Canadian dollar with the Bangladesh Bank.

The country's foreign exchange regime will also widen thanks to the decision, said a high official of the BB official. In October 2016, yuan was included in the International Monetary Fund's basket of reserve currencies.

With this, the yuan became the fifth currency of the IMF's special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans.

The other four currencies are the US dollar, the euro, the Japanese yen and the British pound.

The BB has also taken into consideration the IMF's recognition while allowing banks to open clearing accounts in the Chinese currency, the BB official said.

The central bank's decision would give a boost to bilateral trade, said Syed Mahbubur Rahman, managing director of Dhaka Bank.

It is expected to ease foreign trade as banks will be able to settle export- and import-related processes with China through yuan.

The addition of the yuan to the list currencies that banks can open clearing accounts with will also help make the economy more vibrant, said Rahman, also the chairman of Association of Bankers, Bangladesh, a platform of the private banks chief executives.