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Pakistan says adieu to US dollar and welcomes yuan for trade with China

According to a new report, Pakistan’s central bank has allowed the Chinese yuan to be used for bilateral trade and investment activities. This move could replace the US dollar for transactions in the strategic CPECBSE -4.45 % projects.

The decision was made after rejecting a proposal from China to allow yuan as legal tender in Gwadar, Balochistan.

The adoption of yuan implies that both countries would be able to replace the US dollar for transactions.

All arrangements for using the Chinese currency for trade and investment were in place already, the State Bank of Pakistan stated.

This step means that Pakistan and China would be able to replace the US dollar for transactions in the CPEC (China Pakistan Economic Corridor).

Ahsan Iqbal, Minister for Planning and Development, said that the government was considering a Chinese proposal to use renminbi or yuan in place of the US dollar for transactions in all bilateral trade.

The bank stated:

“The SBP, in the capacity of the policy maker of financial and currency markets, has taken comprehensive policy related measures to ensure that imports, exports and financing transactions can be denominated in yuan.”

 

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