Pakistan and China are considering a 'currency swap arrangement', which if finalised would enable the two countries to do business in rupee and yuan RMB replacing greenback as the trading money, Chinese envoy was quoted as saying yesterday.
"We have made good progress in our discussions on the currency swap arrangement," Chinese Ambassador Lou Zhaohui said.
The two sides have completed discussions at the finance secretaries' level and Governor State Bank of Pakistan Syed Salim Raza would shortly visit Beijing for further negotiations in this regard. The State Bank, in case of finalisation of the agreement, would have to amend its foreign exchange reserve rules.
Disclosing the current state of talks on the proposed arrangement, the Chinese envoy said Islamabad and Beijing were working out the modalities for the implementation of the agreement.
If the arrangement materialises it would be the eight such agreement signed by Beijing, which previously has similar pacts with Argentina, Belarus, Hong Kong, Indonesia, Malaysia, South Korea and Russia.
"Just last week we concluded an agreement with Hong Kong," Zhaohui said. China is expanding the role of Yuan RMB in international finance and trade and is eyeing it as a major international currency in the long run along with euro and US dollar. The ambassador felt the currency swap was a good idea for boosting bilateral cooperation and said China was open and flexible to it.
A currency swap arrangement, experts believe, would ease liquidity issues for Pakistan and conserve dollar reserves. Additionally, it would lower the transaction costs and avoid the risk of fluctuations in exchange rates.
Zhaohui said there was no fixed timeframe for the finalisation of the arrangement.
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