Bank of Thailand Encourages Use of Chinese Yuan
nsnbc : The Bank of Thailand encourages Thai investors to gain a better understanding on the use of the Chinese yuan in investment and trade as Beijing reduces regulations on the use of the currency to promote the renminbi in transactions in the region. The move follows the recent BRICS summit in Brazil and the decision to capitalize and open the BRICS development bank.
The Assistant Governor for Financial Market Operations Group of the Bank of Thailand (BOT), Chantavarn Sucharitakul, said at a BOT seminar on Friday, that Beijing is rapidly reducing regulations regarding the use of its currency, and that BOT believed that the use of the yuan would provide more options in terms of payments when doing business with China. Thailand’s “The Nation” quotes Chantavarn Sucharitakul as saying:
Presently the use of Chinese yuan in Thailand is not widespread since only 1 per cent of the total 14 per cent of Thailand’s trade activities with China is traded by using RMB … However, this rate is increasing fast, and therefore Thai investors should learn how to use the currency as a means for trade and investment in order to provide them with additional trading channel because the yuan’s importance and popularity will increase in the future even though it is not widely accepted and fully liberated at the moment”.
The daily turnover of the yuan in the foreign exchange markets has been growing from near zero in 2009, to the equivalent of 720 million dollar in 2013. The Bank for International Settlements (BIS) states that the yuan was the eighth most actively traded currency in the foreign exchange turnover in 2013. Thailand’s trade with China increased from 57 billion US dollars in 2011 to 65 billion US dollars in 2013.
A number of prominent Thai businessmen and investors have, over the past months, made statements which suggest that they advise their colleagues to be prudent and to educate themselves about the possibilities trade in yuan opens for them.
Earlier this month, the BRICS nations Brazil, Russia, India, China and South Africa held a summit in Brazil. As expected since their 2013 meeting at the sidelines of the G7 in St. Petersburg, Russia, the BRICS nations gave the final green light for the capitalization of the BRICS Development Bank with 100 billion US dollars. The BRICS partners are now discussing where to place the new bank’s headquarters.
The development has been compared in significance with the Bretton Woods meeting that resulted in the creation of the IMF, the World Bank, and the agreement to use the gold-backed dollar as global reserve currency. Since then, the dollar is no longer gold-backed, the “petro” behind the petro-dollar depends on war machines like a heroin addict on his next “fix”, and the dollar continues (f)ailing and driving conflicts.
Both the political and economic underpinnings of the BRICS economy are robust and will maybe not challenge, but provide a sound alternative to the Bretton Woods institutions and the dollar as global exchange currency. Most independent analysts would agree with the BOT’s Chantavarn, that it would be prudent if Thai businessmen carefully assessed how to adapt to these developments to make the best of them, rather than falling of the wagon in the curve. It’s a wagon that keeps accelerating. The renminbi may be a basket of currencies, but it’s not a “basket case”.
CH/L – nsnbc 19.07.2014