Trade between China and Pakistan: Dedollarization of the RMB

According to Liao Longtai, General Manager (GM) of Hangeng Trade Company in Gwadar, “With the implementation of new financial currency arrangement by converting Chinese currency “RMB” directly into Pakistani rupee without using the US dollar, Chinese investors can save 0.5 million Pakistani rupees on every transaction of Rs. 10 million.”

He said, “the new mechanism has boosted our confidence and more investors will pour in to invest in Pakistan in general and Gwadar in particular”.

“In the previous financial system, Chinese traders and investors had to first convert RMB into the US dollar and then into the Pakistani rupee. Owing to the volatile value of the US dollar, exchange rate damage had to be borne out by Chinese traders that used to keep them upset. The new RMB-Rupee direct conversion mechanism has finally ended the loss for Chinese investors,” he added.

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