Yuan-dirham direct pair to boost trade
The two-way trade between the UAE and China is all set grow to $80 billion over the next two years.
Dubai - Both trading pairs will be effective from September 26
China has agreed to establish a direct trading pair between its yuan currency and the dirham in anticipation of a remarkable surge in bilateral trade and tourism ties following a decision by the UAE to grant visa on arrival for Chinese visitors.
China will also establish a direct trading pair between its currency and Saudi riyal, Chinese foreign exchange trading platform operator said on Friday.
Both trading pairs will be effective from September 26.
Direct trading pair will help lower foreign exchange costs for trading companies in the UAE and Saudi Arabia, where currencies are pegged to the dollar.
Currency experts said the move to allow yuan's direct trading pair with dirham is strategically critical given the UAE's fast growing trade and economic ties with the world's second largest economy, particularly in the aftermath of the open visa policy announced for China, which is currently ranked as Dubai's largest trade partner and the UAE's second-biggest trading partner.
The two-way trade between the UAE and China is all set grow to $80 billion over the next two years, and may end the current year with $60 billion, up from $54.8 billion in 2014, analysts said.
The direct currency trading move also comes at a time when China is embarking on an ambitious drive to diversify its global assets to fully exploit its huge investment capabilities.
Direct trading of yuan is also expected to give a major fillip to Chinese tourist traffic to the UAE. More than 500,000 Chinese tourists visited the UAE in 2015 while the first half of this year witnessed 267,000 Chinese tourist arrivals in Dubai, recording an 11 per cent surge.
"Given that more than 120 million outbound Chinese tourists were recorded in 2015, the UAE is well placed to attract a far higher flow from China. The visa on arrival policy and direct currency trading move are therefore quite strategic in boosting two way trade and tourism," experts said.