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http://www.forbes.com/sites/kenr ... es-with-qatar-deal/
Internationalization Of China Currency Continues With Qatar Deal
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Two weeks after signing a currency swap deal with Russia, China is back at it again, this time with the rich Persian Gulf nation Qatar.
The People’s Bank of China announced Monday that it signed the deal worth 35 billion yuan (about $5.7 billion) with the central bank of Qatar. The three-year swap arrangement could be extended by the two sides, said a statement on PBoC’s website.
Both official banks signed a memorandum of understanding on renminbi (RMB) clearing settlement in Doha, the capital of Qatar. China also agreed to extend the RMB Qualified Foreign Institutional Investor scheme to Qatar, with an initial quota of 30 billion yuan. That gives Qatar investment funds access to local Chinese securities rather than going through Hong Kong.
The Emir of Qatar, Sheikh Tamim Bin Hamad al-Thani, is currently in China an official visit. China is interested in Qatar oil and gas, and this swap arrangement would allow Chinese oil importers to settle trade in the local currencies instead of the dollar or euro.
On Oct. 14, China and Russia signed the same deal, only this one was worth $24.4 billion.
The Chinese currency is expected to hold its own against the dollar, even in a strong dollar environment which tends to knock out emerging market currencies, some money managers believe.
“We expect moderate currency appreciate on current trends in China, like maybe one to one and a half percent appreciation next year,” said Edmund Harriss, a bond fund manager at Guinness Atkinson in the U.K. “When you look at fundamentals of the RMB, the story is still positive,” he said.
Continued internationalization of the Chinese currency is a positive for investors holding Chinese bonds. As China’s currency and debt markets open, more demand for those assets can send their values higher. |
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