The Bank of Thailand (BoT) has announced that it will relax the rules on the use of China’s yuan for trade transactions this year.
This move is aimed at helping Thai exporters and importers reduce the impact of currency volatility and promote the use of local currencies in bilateral trade.
According to BoT deputy governor Mathee Supapongse, the BoT is in talks with the People’s Bank of China (PBoC) on how to facilitate and encourage the use of the yuan for trade settlements. He said that China is Thailand’s major trade partner, accounting for about 12% of Thailand’s total trade value in 2022, but the payments in local currencies are still low, at around 2%.
Mathee added that there will be no problem with the supply of yuan for trade purposes, as both countries have a swap line agreement that allows them to exchange up to 70 billion yuan or 370 billion baht. He also said that the use of yuan should not be seen as a threat by the US, as the Chinese currency will not be able to replace the US dollar’s dominant role in the global financial system in the short term.
The BoT has been promoting the use of local currencies for trade with its neighboring countries, such as Malaysia, Indonesia, Cambodia, Laos, Myanmar and Vietnam, to help businesses hedge against exchange rate risks and reduce transaction costs. The BoT expects that the relaxation of rules on the use of yuan will further enhance trade and investment ties between Thailand and China.