Thailand considering China currency swap agreement
Thailand is studying a possible currency swap agreement with China that would make it easier for exporters to settle some of their trade in the two currencies, Bank of Thailand Deputy Governor Atchana Waiquamdee said. There is no “formal” discussion with China yet, Atchana said in an interview in Bangkok Monday. While Thailand has been diversifying from U.S. dollar assets in its reserves in the past few years, the dollar isn't going to be replaced as the world's reserve currency, she said.
“We are in the stage of studying it to see if it is beneficial for the both of us,” she said, adding that a swap agreement isn't intended for liquidity management. “You can't say that just because you signed it, you are going to see a surge in trade relations.”
China has provided about 650 billion yuan (US$95 billion) to countries including Argentina and South Korea since December through currency swaps to encourage the currency's use in global trade and finance. The dollar's status as the world's leading reserve asset has been challenged as China, Russia, India and Brazil called for a more diversified system.
Thai central bank Governor Tarisa Watanagase said in June that while there is a “trend to use yuan,” nations have to consider its “depth, width and the acceptability” before it can become an international currency. The Chinese yuan isn't fully convertible.
China has expanded yuan settlement agreements from border zones to its largest financial centers, including Shanghai and Guangzhou, and the program is being rolled out across Malaysia, Indonesia, Brazil and Russia. Its central bank first brought up the concept of a supranational currency to replace the dollar in reserves in March. The nation has the world's largest reserves at US$2.13 trillion.
The U.S. currency's share of global central banks' foreign reserves increased to 65 percent in the first three months of this year, from 64 percent in the previous quarter, according to the International Monetary Fund. The dollar's share has fallen from 72.7 percent in 2001.
Thailand's foreign-exchange reserves totaled US$125.2 billion in the week ended Aug. 21.
Thailand is studying a possible currency swap agreement with China that would make it easier for exporters to settle some of their trade in the two currencies, Bank of Thailand Deputy Governor Atchana Waiquamdee said. There is no “formal” discussion with China yet, Atchana said in an interview in Bangkok Monday. While Thailand has been diversifying from U.S. dollar assets in its reserves in the past few years, the dollar isn't going to be replaced as the world's reserve currency, she said.
“We are in the stage of studying it to see if it is beneficial for the both of us,” she said, adding that a swap agreement isn't intended for liquidity management. “You can't say that just because you signed it, you are going to see a surge in trade relations.”
China has provided about 650 billion yuan (US$95 billion) to countries including Argentina and South Korea since December through currency swaps to encourage the currency's use in global trade and finance. The dollar's status as the world's leading reserve asset has been challenged as China, Russia, India and Brazil called for a more diversified system.
Thai central bank Governor Tarisa Watanagase said in June that while there is a “trend to use yuan,” nations have to consider its “depth, width and the acceptability” before it can become an international currency. The Chinese yuan isn't fully convertible.
China has expanded yuan settlement agreements from border zones to its largest financial centers, including Shanghai and Guangzhou, and the program is being rolled out across Malaysia, Indonesia, Brazil and Russia. Its central bank first brought up the concept of a supranational currency to replace the dollar in reserves in March. The nation has the world's largest reserves at US$2.13 trillion.
The U.S. currency's share of global central banks' foreign reserves increased to 65 percent in the first three months of this year, from 64 percent in the previous quarter, according to the International Monetary Fund. The dollar's share has fallen from 72.7 percent in 2001.
Thailand's foreign-exchange reserves totaled US$125.2 billion in the week ended Aug. 21.