Thursday July 2, 09:14 AM
China lets foreign banks access yuan for HK trade
BEIJING, July 2 (Reuters) - Foreign banks will be able to borrow yuan from mainland lenders to settle trade in Hong Kong and Macau under a pilot scheme steered by the central bank.
The central bank chiefs of China and Hong Kong signed a memorandum on Monday, paving the way for the scheme, which analysts say is a step toward greater international use of the yuan.
According to detailed rules published on Thursday by the People's Bank of China, foreign banks settling imports and exports in yuan in Hong Kong and Macau will be allowed to buy Chinese currency from mainland banks within an undisclosed quota.
Exporters will be allowed to keep their yuan earnings outside China, according to the rules, which took effect on Wednesday.
Chinese banks will also be allowed gradually to extend trade finance in yuan to overseas companies, the PBOC said.
The programme will initially be piloted by about 440 firms in Shanghai and the southern province of Guangdong, media reports have said.
The PBOC statement said the rules would apply to a separate yuan-settlement trial with the Association of South East Asian Nations that trade with the Yunnan and Guangxi regions in southern China.
(Reporting by Zhou Xin, Langi Chiang and Alan Wheatley; Editing by Ken Wills)
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