SHANGHAI — China began allowing the Malaysian ringgit to trade against its currency in its domestic foreign exchange market on Thursday — another step toward raising the yuan's scope in international trading.
As of Thursday morning, the central bank began setting a "central parity rate" for the yuan and ringgit, much as it does for the U.S. dollar and several other major currencies.
The currencies will be allowed to fluctuate by as much as 5 percent daily above and below the parity rate, which was 0.46204 ringgit per yuan on Thursday.
China's parity rates for foreign exchange are weighted averages of prices — given by banks known as market makers because of their ability to quote both buy and sell rates — excluding highest and lowest offers.
China limits trading of its currency mainly to use in international trade, with market volatility kept in a tight range thanks to daily trading limits. Most of its international trading is done in U.S. dollars.
But Beijing aspires to see the yuan used more widely as an international currency, and to reduce its own exposure to exchange rate volatility stemming from its massive investments in U.S. dollar assets.
Expanding trading to include the ringgit is meant to promote China-Malaysian trade and reduce foreign exchange costs, the China Foreign Exchange Trading Center said in a notice on its Web site.
Allowing broader trading for the yuan is also expected to improve market liquidity, it said.
Apart from the U.S. dollar and ringgit, the yuan also trades against the euro, Japanese yen, Hong Kong dollar and British pound.
Sunday, August 22, 2010
Sunday, August 8, 2010
TEHRAN — Iran's main economic partner China has invested around 40 billion dollars in the Islamic republic's oil and gas sector, a senior Iranian official said on Saturday.
Deputy Oil Minister Hossein Noqrehkar Shirazi also said that Tehran's oil exports to China fell by 30 percent in the first six months of 2010 compared with the corresponding period last year.
"The volume (of Chinese investment) in upstream projects is 29 billion dollars," Noqrehkar Shirazi told Mehr news agency, adding that Beijing had signed contracts worth another 10 billion dollars in petrochemicals, refineries and oil and gas pipeline projects.
He said China has also put forward proposals to participate in building seven new refineries in Iran.
Iran, OPEC's second largest oil exporter, has a dilapidated refining sector, forcing it to import petroleum products such as gasoline to meet domestic needs.
Noqrehkar Shirazi said that Chinese imports of Iranian oil fell in the first half of the year.
"Although Iran is still among top 10 oil exporters to China, it is the only country which in the first six months of 2010 has seen its exports to China falling," he said.
"The volume of oil exports to China in the first six months of this year decreased to less than 9.02 million tonnes or 66.12 million barrels. This shows a 30 percent decrease" over the first half of 2009, he added.
In recent years, China has filled the gaps in Iran's energy sector left by Western firms forced out by international sanctions.
In 2009, China became Iran's premier trading partner, with bilateral trade worth 21.2 billion dollars against 14.4 billion dollars three years earlier.
Commercial ties between the two countries were almost non-existent 15 years ago, amounting to just 400 million dollars.
According to official data, Western sanctions opened the way for Chinese companies, which last year directly supplied Iran with 13 percent (7.9 billion dollars) of its imports.
Iranian estimates also suggest that an equivalent amount was imported indirectly through the United Arab Emirates in 2009.
China backed the fourth set of UN sanctions against Iran over its contested nuclear programme, but Beijing has consistently urged the world powers to resolve the crisis diplomatically.
On Friday, it also opposed the latest unilateral sanctions on Iran imposed by the European Union.