Life of Guangzhou - HK Says Hopes Yuan Trade Settlement Can Start in July

(File photo)

Hong Kong on Monday said it hopes a scheme to allow bilateral trade with mainland China to be settled using the Chinese currency can start in July.

China's Central Bank Governor Zhou Xiaochuan and Joseph Yam, chief executive of the Hong Kong Monetary Authority, signed a memorandum in Hong Kong on Monday, agreeing to launch the scheme, which was announced in December.

The scheme will expand Hong Kong's role as an offshore centre for trade in the Chinese yuan and test the ground for the currency's gradual liberalisation.

The scheme should cut foreign exchange costs for exporters and importers, who at present can only settle trade in Hong Kong dollars or U.S. dollars because the yuan is not fully convertible.

In April, Beijing said the Chinese cities of Guangzhou, Shenzhen, Zhuhai and Dongguan in southern Guangdong province, neighbouring Hong Kong, as well as Shanghai would start the trial scheme.

China is also looking at allowing yuan trade settlement with other trading partners. On Sunday it said it was working on an agreement with Brazil, but gave no details.

(Reporting by Susan Fenton, Editing by Chris Lewis)

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