There is an upward trend in using the Chinese yuan for trade settlements between Cambodia and China, with more banks in the Kingdom facilitating such transactions.
And the reason for this is that Chinese investors are seeking ways to reduce their risk by depending less on the greenback, National Bank of Cambodia (NBC) deputy director general of central banking, Khou Vuthy said.
Speaking to reporters on Thursday at the Renminbi (RMB) forum with the theme Asean’s Economy and the Internationalisation of RMB, organised by the Bank of China (Cambodia), he said usage of the Yuan for cross-border settlements had been increasing in the last few years.
“Last year, cross-border settlements in yuan represented about 10 per cent of the total trade between Cambodia and China,” he said.
This, he said, proved that the share of payments in yuan is getting larger. An NBC figure showed cross-border settlements in yuan in 2016 represented only 2.5 billion ($377 million), or approximately seven per cent of the two countries’ total trade.
“I am optimistic that using the yuan for cross-border settlements will keep increasing in the Cambodian banking system. The evolution is parallel with regional and global trends.
“Many countries try to reduce their dependency on the dollar as the only currency for cross-border trade by promoting the use of their own currencies together with the yuan,” Vuthy said.
The NBC, he said, has allowed banks and financial institutions to use the yuan. Two Chinese banks operating in Cambodia – the Bank of China and Industrial and Commercial Bank of China Ltd – are allowed to use the yuan for payments and as a clearing facility. Thirteen other commercial banks also operate using the yuan.
According to NBC deputy governor Sum Sannisith, who made the opening remarks at the forum, bilateral trade between Cambodia and China was worth $6.06 billion last year.
Cambodia imported $5.3 billion from China, while the volume of Cambodian exports to that country reached $758 million.
“The growing economic and financial sector’s links between China and Cambodia have contributed to the Kingdom’s economic growth and development, especially during the last two decades,” he said.
Bank of China CEO Chen Changjiang said yesterday that the RMB forum was launched to provide a platform to update relevant parties on the recent approach, innovation and accomplishments of the currency.
“As the leading bank for RMB business in Cambodia, it is our responsibility to keep the corporate institutions and the public up to date on its usage,” he said.