Trade
ISLAMABAD: Pakistan has witnessed a remarkable surge in trade settlement in Chinese RMB, with a staggering 600% increase, according to well-informed sources in the Commerce Ministry, as reported by Business Recorder. The trade settlement in Chinese RMB has surged from 2% in 2018 to over 14% in 2023.
The State Bank of Pakistan (SBP) recently apprised the Apex Committee of the Special Investment Facilitation Council (SIFC) that the necessary regulatory framework for RMB trade settlement is in place. The SBP has designated three banks, including ICBC, BoC, and SCB, to establish RMB settlement and clearing setups.
A cooperation Memorandum of Understanding (MoU) was signed between the People’s Bank of China (PBC) and SBP. Consequently, PBC authorized ICBC to act as the RMB clearing bank in Pakistan. This strategic move has led to a significant increase in trade settlements in RMB, showcasing a shift from 2% in 2018 to more than 14% in 2023.
The State Bank plans to communicate the development of the regulatory framework for importers, exporters, and other investors. An update on this progress will be presented in the next meeting of the Apex Committee.
The Council was also briefed on the SBP’s regulatory framework to facilitate banks in carrying out settlements through the Asian Clearing Union (ACU) mechanism. The ACU mechanism allows the settlement of trade in three currencies: dollar, Euro, and JPY. Pakistan, an active member of ACUs, recorded a total trade of $509 million during Jan-Oct 2023.
Furthermore, the meeting discussed the facilitation of exports to Afghanistan through the cash over-the-counter facility, which is already in place. This facility, subject to the submission of Customs’ declarations, ensures that foreign currency carried by Afghan importers originates from across the Afghan border.
The Governor of the State Bank of Pakistan has been directed to provide a progress update on SBP’s engagement with the National Bank of Pakistan to utilize its branches/booths at border crossing points for collecting foreign currency cash. This update is expected to be presented in the next meeting of the Apex Committee.
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