Yuan Settlements Jump 160% as Nokia Shuns Dollars: China Credit
By Bloomberg News
Nov. 3 (Bloomberg) -- International trade transactions settled in yuan more than doubled to a record in the third quarter as companies including Nokia Oyj and Metro AG turned to a currency that rose 24 percent against the dollar in six years.
The value of settlements jumped 160 percent from the prior three months to 126.5 billion yuan ($19 billion), the People’s Bank of China reported late yesterday. The amount exceeded all but one of seven forecasts in a Bloomberg survey of analysts. Metro, Germany’s biggest retailer, says paying Chinese suppliers in yuan benefits both parties.
“Doing business with China is much easier now,” said Thomas Burkhalter, finance director of Metro’s Hong Kong-based purchasing unit. “In the past, we have faced problems when there was a sudden movement in the U.S. dollar, which led suppliers to demand additional costs to cover exchange losses.”
While yuan settlements accounted for 2.4 percent of China’s $794 billion of imports and exports during the last quarter, the pace of growth was more than 10 times faster than the expansion in overall trade. The dollar has weakened against all 16 major currencies tracked by Bloomberg since June, when China scrapped a two-year currency peg and said it would allow a more flexible exchange rate.
Nokia, the world’s largest maker of mobile phones, has used yuan for international trade, the Espoo, Finland-based company said last week in an e-mailed response to questions. Sweden’s Ikea, the biggest home-furnishings retailer, also has used yuan for trade, according to Linda Xu, the public relations manager for its Chinese subsidiary. Oak Brook, Illinois-based McDonald’s Corp., the No. 1 restaurant chain, has made cross-border transfers in the currency, its China unit said last week in an e-mailed response to questions.
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