Wed, Jan 12, 2011 - Page 11 News List

HSBC aims to begin yuan-lira spot trading in March

Bloomberg

HSBC Holdings PLC plans to start spot trading between the yuan and the Turkish lira in March as China boosts the international role of its currency.

Converting lira into yuan will cut foreign-exchange transaction costs for Turkish companies doing business with China by 5 percent to 7 percent compared with dealing in dollars, Virma Sokmen, head of corporate banking at HSBC in Turkey, said at a news conference in Istanbul.

“The renminbi could be one of three most-traded currencies in a short while,” HSBC said in a statement yesterday. “Thanks to China’s overseas trade and investment volume, the renminbi can become an international reserve currency.”

China, the fastest-growing major economy, is challenging the dominance of the dollar as the world’s major reserve currency. Chinese Premier Wen Jiabao (溫家寶) said in March he was “worried” about holding US assets after the financial crisis hobbled the world’s largest economy.

Yuan spot trading began versus the Russian ruble and Malaysia’s ringgit last year. China also allowed offshore trading of the currency in Hong Kong and opened its bond market to foreign banks.

Turkish exports to China grew to US$2.1 billion in the year to November last year from US$1.6 billion for full-year 2009, according to Turkey’s official statistics agency in Ankara. Imports expanded to US$15.3 billion from US$12.7 billion in the same period.

China will conduct more than half of its foreign trade in yuan in 2015, to the value of US$2 trillion, HSBC said.

Turkey is trying to deepen ties with emerging markets at a time when its talks to enter the EU have stagnated, said Simon Quijano--Evans, chief economist for emerging Europe, the Middle East and Africa at Credit Agricole Chevreux SA in Vienna.

China was Turkey’s 13th biggest export market and its third-biggest source of imports after Russia and Germany as of November, according to Turkey’s statistics agency.

HSBC Turkey has a correspondent bank agreement with HSBC China, which gets the yuan from China’s central bank.

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