Pakistan, China to trade in local currencies

Standard Chartered conducts roadshow to create awareness

Salman Siddiqui November 03, 2016
Standard Chartered conducts roadshow to create awareness. PHOTO: REUTERS

KARACHI: Standard Chartered has taken the lead in conducting a roadshow in Pakistan to inform businessmen that hurdles to trade with China in local currencies - Pakistani rupee and Chinese renminbi - have been razed.

Until now, the two countries were trading in dollars, which caused hurdles in the way of banking transactions for traders. The two nations signed a currency swap agreement a couple of years ago.

Standard Chartered Pakistan Chief Executive Officer Shazad Dada said they had a very fruitful meeting with the State Bank of Pakistan on Thursday morning. The central bankers pledged to facilitate trade in the two currencies.

Pakistan has failed when it comes to trade with China

The roadshow is held at a time when most banks in the two nations have yet to set up their branches in each other’s countries. However, Standard Chartered has branches in both the countries.

The roadshow is part of an international series, as the Greater China Region’s Standard Chartered has conducted similar shows in the Middle East and Africa in recent days.

China is now in agreement with eight countries to conduct trade in their local currencies. These include Pakistan, Hong Kong, the UAE and Qatar.

China has been conducting roadshows since its official currency renminbi was included in the IMF’s Special Drawing Rights (SDR) list of global currencies, effective from October 1, 2016. The IMF lends in SDR denomination to nations across the world.

This coincided with China’s on-going investment worth $46 billion in Pakistan under the China-Pakistan Economic Corridor (CPEC).

Carmen Ling, the bank’s delegation lead to Pakistan and Managing Director, said the infrastructure had been laid to begin trade in local currencies. “Now, it all depends on how fast the requisite information is disseminated to businessmen.”

Pakistan's trade deficit widens 27.3%

More than 60% of Standard Chartered’s market across Africa, Asia and the Middle East stand to benefit from the initiative. Twenty-five of the group’s 72 markets are in Africa and the Middle East.

The initiative could facilitate financing for Pakistan’s key infrastructure projects, while encouraging cross-border economic and trade partnerships, not only with China, but also with those markets positioned along the initiative, she added.

Published in The Express Tribune, November 4th, 2016.

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Zeeshan Hyder | 7 years ago | Reply @bogus,I don't completely agree with you, it may be because of lack of my knowledge and understanding. However, in my opinion, there must be pressure on dollar in the region because trade between China and Pakistan in local currencies will put pressure on demand and supply of us dollar. Hence, Trade in local currencies will lead to low demand of dollars and huge amount of investment and trade between two countries means that dollar will go unaccounted and lead to low demand, consequently, trade in local currencies between China and Pakistan may have a significant impact on us dollar. Please correct me if I am wrong.
Haroon | 7 years ago | Reply It's about time we switch to the Chinese Yuan. It will be beneficial for both our countries. In a number of far eastern countries the Yuan is used openly and without any problems, intact business transactions there are faster than using the US dollar. We should covert asap.
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