HSBC: M’sia to gain from more yuan transactions

Mukhtar Hussain

PETALING JAYA: Malaysia is expected to benefit from more yuan transactions, driven by the country’s position as a gateway to China and Asean markets, said HSBC Bank Malaysia Bhd.

Chief executive officer Mukhtar Hussain said Malaysia was one of the earliest countries to recognise the potential role of the greater cross-border use of the yuan

“Given China’s significance as Malaysia’s largest trading partner, and as a partner in the Belt and Road Initiative (BRI), the settlement of trade and investment in yuan will significantly lower costs and promote greater cross-border trade and investment activity thus increasing the usage of yuan,” he said in a statement yesterday.

Mukhtar also opined that BRI may increase the use of the yuan for financing as Chinese companies with yuan-denominated balance sheets are likely to increase the local pools of the yuan liquidity.

Spurred on by the government, Chinese companies are actively participating in BRI projects.

“Because countries hosting BRI projects consistently face liquidity shortages in all currencies – and because multilateral financial institutions may not be able to provide sufficient funding – yuan has a competitive advantage as a financing currency,” Mukhtar said.