People's Bank of China enters bilateral currency swap with Mauritius
(MENAFN) The People's bank of China (PBOC), the central bank of the country, has entered into a bilateral currency swap agreement with the Bank of Mauritius, according to a statement released on Wednesday. This agreement, which marks a step forward in financial collaboration between the two nations, aims to enhance economic ties and create new opportunities for bilateral trade and investment. The agreement demonstrates China's efforts to strengthen its economic relationships with smaller, strategically important nations in Africa and the Indian Ocean region.
The total value of the currency swap agreement is set at 2 billion yuan, which is equivalent to approximately 281.1 million U.S. dollars or 13 billion Mauritian rupees. By establishing this currency swap, both central banks are ensuring the availability of liquidity in their respective currencies, which will help facilitate smooth and efficient trade transactions. This financial arrangement will enable businesses in both countries to use their local currencies for cross-border trade, reducing reliance on a third-party currency such as the U.S. dollar, thereby lowering currency exchange risks and costs.
The agreement will be in effect for a period of three years, with the possibility of renewal if both parties agree. This provision for renewal reflects the long-term nature of the financial partnership and the desire for sustained economic cooperation between China and Mauritius. The three-year term offers a stable framework within which businesses and financial institutions in both countries can plan their transactions and investments, fostering a predictable and conducive environment for growth in trade and financial activities.
Furthermore, the currency swap arrangement is expected to expand the use of the Chinese yuan and the Mauritian rupee in international trade, deepening the integration of these currencies into global markets. By promoting the use of local currencies, the agreement supports the broader goals of financial sovereignty and reduces dependence on major international currencies. The PBOC’s statement underscores that this step will not only bolster trade and investment between China and Mauritius but also pave the way for more comprehensive financial cooperation in the future.
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