Doha wants to lead Gulf in renminbi settlement
Abdullah bin Saoud al-Thani, Qatars central bank governor, is aiming to strengthen financial ties between the Gulf state and China, following the recent signing of several strategic agreements between the two countries.
Speaking at the Euromoney Qatar event held in Doha on 24 November, Al-Thani said he hoped to see more financial institutions expand their operations or open full branches in China.
His comments follow the signing of a RMB35bn ($5.7bn) three-year currency swap agreement between Qatar Central Bank and the Peoples Bank of China (PBC) in early November. The agreement will allow trade flows between the two countries to be settled in Chinese renminbi (RMB).
The agreement has been welcomed by Qatars lenders.
This is an important issue that opens the door for banks such as [Qatar National Bank] QNB to do trade financing in a different currency to the dollar, said Joannes Mongardini, head of economics at QNB, during a conference panel discussion.
We see it as a very positive development and good for exporting countries such as Qatar as it gives us more choice and more flexibility, said Abdulaziz al-Ghorairi, senior vice-president and group chief economist at Commercial Bank of Qatar. We feel Qatar is leading the GCC and look forward to developing [this] further.
The two central banks also signed a memorandum of understanding earlier this month that will kick-start further negotiations on how to set up a framework to position Qatar as a regional centre for RMB clearing and settlement.
China also granted Qatar a CN¥30bn ($4.9bn) share under its RMB qualified foreign institutional investor (RQFII) programme. The quota will be available to asset managers licenced in Qatar by the central bank, the Qatar Financial Markets Authority or the QFC Regulatory Authority.
The RQFII programme was started in 2011 and allows investors holding RMB overseas to buy stocks, bonds and other securities in Mainland China.
Initially restricted to Hong Kong, China is now expanding the programme to encourage the use of Chinese yuan internationally.