Officials in Cambodia and China’s Guangdong province are cooperating to establish trade using yuan instead of US dollars, part of the two countries’ increasingly close economic relationship.
The suggestion to use yuan directly, instead of using US dollars as an intermediary currency, was made by deputy-director of Guangdong province Ouyang Weimin during a visit to the province by Cambodian Minister of Commerce Pan Sorasak on Friday.
Seang Thay, a spokesman at the Ministry of Commerce, said yesterday that as trade between the two countries continued to grow, Chinese currency should also increasinglly be used in bilateral trade.
“The fluctuation of exchange rate is risky for businesses, because sometimes the US dollar could be appreciate or depreciate compare with the Chinese yuan,” he said.
“We are trading with China more and more, so accepting Chinese yuan for trade deals is also good for businesses.”
While the two countries appear in-sync on promoting trade in yuan, there is not yet an official agreement to establish such a system in Guangdong, according to Thay.
Last September, the National Bank of Cambodia (NBC) and the People’s Bank of China in the autonomous Guangxi region in southern China launched an official yuan-riel exchange rate, which allowed banks in Guangxi to exchange the two currencies directly. That marked the first time riel could be exchanged in China and eliminated the need to use US dollars as an intermediary currency.
According to NBC data, there were 17 banks in Cambodia that could handle yuan transactions last year, up from 11 in 2014. Only four – ICBC, the Bank of China, Canadia Bank and First Commercial Bank – allow deposits to be made in yuan.
In 2016, cross-border trade in yuan amounted to about $377 million, accounting for about seven percent of the two countries’ total trade and investment, according to the NBC. The remaining 93 percent was done using US dollars.