Thailand studying China currency swap deal

BANGKOK, Aug 31 (Reuters) - The Bank of Thailand is studying a possible currency swap agreement with China that would help exporters in settling their trade deals, a central bank official said on Monday. But any deal would take time, senior director Pongpen Ruengvirayudh told Reuters.

“It’s nothing at the moment. We’re just studying how this works and to see its good and weak points,” she said.

“China has promoted its swap accords with several countries. But it’s too early to say we would sign a deal with it soon,” Pongpen said.

China is a major trading partner for Thailand and in some months this year it has been the biggest buyer of Thai exports.

Since December, China has broadened the influence of the yuan by arranging six swaps, totalling 650 billion yuan, which will allow importers to pay for Chinese goods in yuan instead of dollars, with South Korea, Malaysia, Indonesia, Hong Kong, Belarus and Argentina.

In March, the People’s Bank of China said it was exploring further such deals. [ID:nPEK185081].

Under the arrangements, a central bank on the other side of the swap will be able to lend the yuan provided by the People’s Bank of China to domestic commercial entities to pay for imports.

Analysts see this as a way for China to get comfortable with the internationalisation of the yuan before potentially moving towards capital account convertibility, something that could eventually allow the unit to become a reserve currency. ($1=34.0 Baht) (Reporting by Kitipong Thaichareon; Writing by Orathai Sriring; Editing by Alan Raybould)