Yuan swap deal to boost Sino-Thai trade, BOT projects
The Bank of Thailand projects growth in Thai-Chinese bilateral trade after this week's signing of a three-year, 70-billion-yuan (Bt325-billion) swap contract, which allows settlements of imports and exports in the Chinese currency.
BOT Deputy Governor Suchada Kirakul said the size of the contract was based on the projected demand for yuan in Thailand over the next five years, judging from the current level of trade between the two countries.
China earlier inked similar contracts with Malaysia and Singapore, involving 80 billion and 150 billion yuan respectively.
At present, more than 90 per cent of Thailand’s exports are transacted in US dollars, and that is costly for those who export to China and other Asian markets because of currency volatility.
During the first 10 months of this year, the value of Thailand’s exports to China was 11.8 per cent of the total, imports for 13.4 per cent. Bilateral trade this year is expected to be between Bt28 billion and Bt30 billion and is likely to rise further thanks to the swap contract, Suchada said.
"Since 2009, yuan-denominated settlements have involved only 350 Thai companies. The contract will cover other companies," she said.
After the contract was signed on Thursday, the Bank of Thailand will open a yuan account in China. Through that account, Thai banks can withdraw yuan for their clients. The Chinese central bank will also open a baht account in Thailand.
