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» 23/07/2009 [Company watch]
China Aoxing Pharmaceutical Corp. Receives Renewal of GMP Certification for Capsule Dosage Form of Pharmaceutical Products
» 15/03/2010 [Industry news]
Recordati S.p.A And Lee Pharmaceutical Announce Partnership For Zanidip(R) In China
» 26/10/2009 [Finance]
China Growth to Remain Fast in Fourth Quarter, Official Says
» 17/08/2009 [Industry news]
Chindex Posts Profit on Product Sales, Health Services
» 07/05/2010 [Industry news]
Hong Kong: Recall of all products manufactured by Quality Pharmaceutical Lab Ltd
COMPANY NEWS back to previous page show list
»06/07/2009 [Finance]
Shanghai Companies Sign First Yuan Settlement Deals

Three Shanghai companies agreed to settle import and export contracts in yuan for the first time, as China seeks to reduce the role of the dollar in global trade.

By Bloomberg News Three Shanghai companies agreed to settle import and export contracts in yuan for the first time, as China seeks to reduce the role of the dollar in global trade. Shanghai Silk Group, Shanghai Electric Group Co. and Shanghai Huanyu Import & Export Co. signed contracts worth 14 million yuan ($2 million) with customers in Hong Kong and Indonesia, Fang Xinghai, director general of the municipal government’s financial services office, said at a press conference today. Bank of Communications Co. and Bank of China Ltd. offered transaction services. China, Russia and India have said the world economy is too reliant on the dollar and called for changes in how $6.5 trillion in foreign-exchange reserves are managed, before Group of Eight leaders meet this week. The settlement program and sales of yuan-denominated debt overseas are designed to make the currency more attractive for central banks to hold. This is a first step on the long road towards that target of making the yuan a global reserve currency, said Nizam Idris, a strategist in Singapore at UBS AG, the world second biggest foreign-exchange trader: That is probably going to take five years or more. The central bank on July 2 allowed companies in Shanghai and four cities in the southern Guangdong province to settle trade in yuan with businesses in Hong Kong, Macau and Association of Southeast Asian Nations. Outside of special border trade zones, companies previously had to convert yuan into dollars or other currencies to settle international trade. Exchange Rate Risks The yuan settlement program will help boost bilateral trade with Hong Kong and Asean nations, People’s Bank of China Deputy Governor Su Ning said at the signing ceremony: The yuan is stable compared with other major currencies. A stable yuan will help companies control exchange-rate risks. The dollar traded at $1.3993 per euro as of 1:25 p.m. in Tokyo from $1.3980 in New York on July 3 and has lost 9 percent in the past four months. The yuan was little changed at 6.8327, and has strengthened 21 percent against the U.S. currency since a dollar peg was scrapped in 2005. China has limited the yuan’s advance in the past year to protect exports. Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said in a July 3 interview that he is urging his nation to diversify its foreign holdings away from the dollar. Russian President Dmitry Medvedev said in an interview with Corriere della Sera that the dollar system is flawed. Dollar Challenge “More and more companies will choose yuan to settle international trade as China’s economy gets stronger and its financial market plays a more important role in the world,” Li Lihui, President of Bank of China, told reporters today: Its an unavoidable trend. The challenge to the dollar, a linchpin of world finance and trade since 1945, underlines the shift in relative economic power toward emerging markets and away from the developed nations that spawned the global crisis. French Finance Minister Christine Lagarde, speaking yesterday at a conference in Aix en Provence, France, said that: we must explore better coordination of exchange-rate policy. Reserve Holdings For all the concerns about the dollar role, emerging markets such as China and India remain dependent on the currency. The International Monetary Fund said June 30 the share of dollars in allocated global foreign-exchange reserves increased to 65 percent, or $2.6 trillion, in the first three months of this year, the highest since 2007. The dollar will maintain its role for many years to come, China Deputy Foreign Minister He Yafei told reporters in Rome yesterday. Participation in Chinese yuan settlement program will be limited to companies with good credit, the People’s Bank’s Su said. The central bank will control the risks associated with the plan, he said. Separately, the Bank of China signed clearing agreements for yuan settlement in Shanghai with 11 overseas banks, including Standard Chartered Plc, Bank of East Asia Ltd. and PT Bank Mandiri, according to the bank statement issued at a press conference today. Its an important first step, said Chris Teunissen, general manager at the Hong Kong branch of PT Bank Mandiri, Indonesias largest financial-services company, in an interview after the press conference. Indonesian firms will read about the signing ceremony and approach us. HSBC Holdings Plc said in a statement it became the first foreign bank to settle cross-border trade in the currency. HSBC and Bank of Communications, known as BoCom, plan to work together to help Chinese exporters expand their international trade and cut foreign-exchange risk. --Judy Chen, John Liu. Editors: Sandy Hendry, Tom Kohn

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