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Pak allows use of Chinese yuan for trade, investment
January 04, 2018
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Islamabad: Pakistan will allow the Chinese yuan to be used for imports, exports and financing transactions for bilateral trade and investment activities, in a move economists said Wednesday would simplify a massive Chinese investment project.

Both public and private sector enterprises may use the yuan for bilateral trade and investment, the central State Bank of Pakistan said in a statement issued Tuesday.

“As per current foreign exchange regulations, Chinese Yuan (CNY) is an approved foreign currency for denominating foreign currency transactions in Pakistan,” it said.

“In terms of regulations in Pakistan, CNY is at par with other international currencies such as USD, Euro and JPY,” it added.

The bank said that in light of a massive Chinese infrastructure project in Pakistan, the move would “yield long-term benefits for both the countries”.

The China-Pakistan Economic Corridor (CPEC), a $54 billion project launched in 2013 linking western China to the Indian Ocean via Pakistan, has been hailed as a “game changer” by Pakistani officials.

They hope the power stations and transmission lines built as part of the project will help ease Pakistan’s chronic power crisis.

Economic analyst and former government adviser on finance Salman Shah welcomed the State Bank’s move, saying that avoiding dollar transactions in the implementation of CPEC would “simplify matters very considerably”.

Meanwhile, Ant Financial, an affiliate of Chinese internet titan Alibaba, has been forced to abandon a $1.2 billion deal to buy US remittances firm MoneyGram after failing to get approval from regulators in Washington.

The decision by the Committee on Foreign Investment (CFIUS) will deal a blow to Alibaba boss Jack Ma’s push into the world’s biggest financial market and follows a number of moves to prevent Chinese purchases of US firms.

The companies jointly announced the termination of the proposed takeover on Tuesday, with MoneyGram chief executive Alex Holmes saying: “The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago.

Agencies

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