Won-yuan exchange to be opened
The Korean government will establish a won-yuan direct exchange market in December, which was agreed to by the Chinese government in July during President Xi Jinping’s visit to Seoul.
The Ministry of Strategy and Finance said yesterday it will create an electronic trading system by mid-December and designate an operator. The role of the operator will be setting purchase and sale prices.
Considering that trade payments and financial transactions in the Chinese currency are on the rise, the government sees the need to use the yuan more. China is Korea’s largest trading partner. Last year, the two countries’ trade volume stood at $229 billion.
The government aims to expand trade payments in yuan to 20 percent of the country’s total trade volume with China from the current 1.2 percent.
It will support the Bank of Communications’ Seoul branch, which opened on Thursday, for smooth settlements and payments of the yuan.
“HSBC Korea and Standard Chartered Bank Korea do use the yuan, but the banks’ payments need to pass through Hong Kong, so it takes more time and increases foreign exchange risks,” said Choi Hee-nam, director general of the International Finance Policy Bureau at the ministry. “The bank will be safer in terms of liquidity supply and faster with transactions.”
For the first three months, commission fees for yuan transactions will be zero.
Because Chinese businesses prefer the yuan, Korean exporters could get better offers, the official said.
BY SONG SU-HYUN [firstname.lastname@example.org]