Chaina’s currency

Chinese currency Yuan. Photo: Getty Images

Dhaka, Bangladesh (BBN)– Bangladesh’s banks have been allowed to open foreign currency clearing account with the central bank in Chinese yuan renminbi, generally known as RMB to facilitate bilateral foreign trade, officials said.

Bangladesh Bank (BB), the country’s central bank, issued a notification in this connection on Tuesday and asked all authorised dealers (ADs) of foreign exchange in Bangladesh to follow the latest instructions.

“It has now been decided that ADs may open foreign currency clearing account with Bangladesh Bank in Chinese yuan renminbi (CNY) too,” the central bank said in the notification.

The country’s scheduled banks had earlier allowed maintaining foreign currency clearing accounts with the central bank in US dollar, pound sterling, euro, Japanese yen and Canadian dollar.

Talking to the BBN, a BB senior official said the central bank has allowed the Chinese currency for opening foreign currency clearing accounts with it after recommendations from some banks.

He also said some Chinese suppliers or exporters impose pre-condition on opening LCs with yuan instead of other internationally usable foreign currencies.

The banks may also make payment for importable products with the Chinese currency if they maintain accounts with overseas banks in the RMB, he added.

The International Monetary Fund (IMF) has already included the Chinese currency in its currency basket – SDR (special drawing rights), another BB official said while reply to a query.

He also said the value of SDR is based on the exchange rates of five major currencies – the US dollar, euro, yuan, Japanese yen, and British pound sterling.

The BB’s latest move came against the backdrop of China being the number one importer for Bangladesh.

Bangladesh imported goods worth US$ 10.19 billion, from China, which was 25.2 per cent of total imports of the country during fiscal year 2016-17, according to official figures.

Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), welcomed the move, saying that it will help boost foreign trade between the two Asian countries.

Another senior banker said the use of RMB will increase in Bangladesh following the BB’s latest moves.