Dubai examines options in yuan trading

Qatar, however, announced a deal on Tuesday to become the first Middle East nation to set up a clearing and settlement facility in the Chinese currency.

Dubai is continuing to explore options to develop trading in the yuan despite a deal announced yesterday by Qatar setting up a clearing and settlement facility in the Chinese currency.

Qatar became the first centre in the Middle East to host a yuan clearing and settlement facility, after a deal between the Qatar Central Bank and the People’s Bank of China.

The Dubai International Financial Centre, which has set its sights on becoming a yuan centre to support the growing trade between the UAE and China, declined to comment. But officials are believed to be pursuing the strategy.

“There are different ways to do this. It has to make sense as a business proposition and I’m not sure Qatar has the volume of trade with China to justify it. We are continuing to look at the possibility. The support of the Central Bank is crucial,” a DIFC official said on condition of anonymity.

UAE-China trade is forecast to reach US$60 billion this year, according to forecasts made last year during the China-Arab States Cooperation Forum in Beijing.

Earlier this year it was announced that China had overtaken India to become the UAE’s top trading partner.

At a ceremony in the Qatari capital Doha yesterday announcing the yuan trading deal, officials said that trade between Qatar and China had reached $11.5bn in 2013, the last year for which details were available.

A statement from the government of Qatar said: “As the first clearing centre in the region to offer yuan clearing and settlement, this deal will increase financial connectivity between China, south-west Asia and the Mena region and increase opportunity to expand trade and investment between China, Qatar and the region.

“The centre provides access to China’s onshore currency and foreign exchange markets for local financial institutions fostering cross-border use of the yuan in the region.”

“ Banks are now able to expand their investment portfolios of financial services and products through the facilitation and issuance of financial instruments such as the trading of debt market products, interest rate and commodity derivative products denominated in yuan,” the statement added.

The governor of the Qatar Central Bank, Sheikh Abdullah Al Thani, said: “The launch of the region’s first RMB clearing centre in Doha creates the necessary platform to realise the full potential of Qatar’s and the region’s trade relationship with China.”

Jiang Jianquing, chairman of the Industrial and Commercial Bank of China which will be the settlement bank in Doha, said: “The first yuan clearing centre in the region will open further the gateway and opportunities for trade between China and the Middle East and Africa. Looking to the future, it will improve the ease of transactions between companies in the region and China by allowing them to settle their trade directly in yuan, drawing increased trade through Qatar and boosting bilateral and economic collaborations between Qatar and China.”

Follow The National's Business section on Twitter