The UAE has had a long journey in embracing the yuan in all its forms, despite the dirham being pegged to the dollar.
In 2012, Emirates NBD became the first bank in the Middle East and North Africa to issue a yuan "dim sum" bond.
The UAE Central Bank also signed in 2012 a currency swap agreement worth 35 billion yuan (Dh20.71bn), a measure to boost trade and investment.
“Usually countries build the RMB [yuan] relationship by first agreeing to set up swap agreements with the People’s Bank of China [PBOC]. This builds confidence in the commercial relationship between the two countries and ensures increasing liquidity,” says Astrid Thorsen, the head of Swift’s Business Intelligence Solutions. “In most cases and based on our Swift statistics, that is what we are seeing, the emergence of additional payment flows. Usually it’s a really good start to establish confidence.”
“As the commercial relationship gets stronger, we typically see the emergence of a Memorandum of Understanding (MoU), which often is the precursor to an appointment by PBOC of a Chinese institution to become a clearer in the new country.”
The Abu Dhabi Investment Authority received in 2008 a Qualified Foreign Institutional Investor (QFII) licence, with a quota of $1bn. The QFII allows foreign institutions to invest in yuan-denominated securities.
Meanwhile, the Agricultural Bank of China, the country’s third-largest lender by assets, last year listed a 1bn yuan bond on Nasdaq Dubai, becoming the first Chinese issuer to list a bond in the Middle East and North Africa region.
UAE banks have also been expanding in China, opening branches and representative offices on the mainland and Hong Kong, helping to boost dealings in yuan. Union National Bank was the first UAE lender to enter mainland China in 2007, opening a representative office in Shanghai.
National Bank of Abu Dhabi (NBAD) inaugurated its representative office in Shanghai in 2012, complementing its Hong Kong branch, and Emirates NBD opened its representative office in Beijing, the first office for a Middle Eastern bank in the Chinese capital.
FGB also aims to open a representative office on the mainland of China.
Chinese banks have also left their mark in the UAE. Industrial and Commercial Bank of China, the country’s largest lender, has had an office in the Dubai International Financial Centre since 2008.
DIFC is also home to branches of the Agricultural Bank of China, Bank of China Middle East, and China Construction Bank. China Development Bank plans to open a branch in Dubai, following in the footsteps of the other lenders.
dalsaadi@thenational.ae
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The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
The specs: 2018 Renault Megane
Price, base / as tested Dh52,900 / Dh59,200
Engine 1.6L in-line four-cylinder
Transmission Continuously variable transmission
Power 115hp @ 5,500rpm
Torque 156Nm @ 4,000rpm
Fuel economy, combined 6.6L / 100km
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Directed by: John Lee Hancock
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Founded: 2018
Based: Dubai, UAE
Sector: Startups
Size: 14
Funding: $1.7m from HNIs
The%20specs
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What are the GCSE grade equivalents?
- Grade 9 = above an A*
- Grade 8 = between grades A* and A
- Grade 7 = grade A
- Grade 6 = just above a grade B
- Grade 5 = between grades B and C
- Grade 4 = grade C
- Grade 3 = between grades D and E
- Grade 2 = between grades E and F
- Grade 1 = between grades F and G
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Engine: 2.0-litre 4-cyl turbo
Power: 201hp at 5,200rpm
Torque: 320Nm at 1,750-4,000rpm
Transmission: 6-speed auto
Fuel consumption: 8.7L/100km
Price: Dh133,900
On sale: now
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Rating: 5/5
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Transmission: 8-speed auto
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Torque: 353Nm
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On sale: now