Edited and Translated by People's Daily Online
Thai media reported that China and Thailand signed a currency swap agreement worth 7 billion yuan on Thursday. Prasarn Trairatvorakul, president of Thai central bank said on Dec. 19 that this agreement would promote the use of yuan in international trade settlements.
Insiders said that the swap agreement will enable both countries use domestic currency for valuation and settlement in future business and investment without relying on the currency of any third country. Within a limited period of time, the central banks of both countries shall summarize and settle up the accumulated amount.
Bringing more convenience for remittance
Now, the exports value from Thailand to China accounts for 11 percent of the total volume of exports, and more than 90 percent of the total exports from Thailand are made in U.S. dollars.
Li Wencong, deputy president of the Industrial and Commercial Bank of China (Thailand) said the investment and trade volume between China and Thailand is considerable, which was previously settled with currency of the third party including U.S. dollars.
In this way, both countries need to exchange their domestic currency into U.S. dollars when engaging in bilateral investment and trade with the commission charge normally paid twice.
Now, a direct change between THB and yuan is achieved, which will reduce the costs. In addition, a direct change is convenient for risk management. Yuan and THB both are Asian currencies with similar tendencies while the fluctuating exchange rate of the U.S. dollar will bring more risks.