China Foreign Exchange Trade System (CFETS), the nation's official inter-bank market trading platform and infrastructure provider, has extended its direct trading and quotation services between yuan and baht currencies across the world's second-largest economy.
The service extension is aimed at lowering the cost and risk of foreign exchange conversion and boosting usage of both currencies, the Bank of Thailand said in a statement.
The services were previously restricted to Yunnan province only, it said.
Apart from yuan, the Bank of Thailand has joined with its counterparts in Malaysia, Indonesia, Japan, Cambodia, Laos, Myanmar and Vietnam to provide local currency settlement services to facilitate using local currencies for trade payments instead of US dollars, helping to curb the risk of exposure to volatile dollar settlements.
Using the US dollar for trade payments doubles the conversions from the greenback to local currencies, costing business operators.
The Bank of Thailand reached an agreement late last year to extend bilateral currency swaps worth 70 billion yuan (351 billion baht) with the People's Bank of China for another three years. The bilateral swap provides access for both central banks to the currency of the other party and this should bolster confidence in the private sector and among financial institutions about the availability of local currency for cross-border trade and investment settlement.
