Bankers have hailed the imminent trading of the Chinese yuan as a move that will help ease the demand for the US dollar in the country�s forex market.
They explained that the value of the cedi, which has plummeted in recent times as a result of the pressure put on it by traders� demand for the dollar, will see some recovery when the yuan comes in -- as businesses and traders dealing in the Sino-region will not need to convert to any major currency such as the dollar before transacting business.
In separate interviews with the B&FT, Daniel Asiedu, Chief Executive Officer of Zenith Bank, and Gilbert Hie, Managing Director of Societe Generale Bank, believe that trading of the yuan will assuage pressure on the cedi.
�Yuan trading is good. One of the factors contributing to the fall of the cedi against the dollar is that for every transaction you need to do, one has to first convert it to the dollar before any other currency. Meanwhile, most of our current imports come from China.
�So having a situation where I don�t have to go to dollar but straight to the yuan will help ease the pressure between the dollar and cedi,� Mr. Asiedu said.
The central bank has said it will soon allow the trading of the Chinese yuan in the country to reduce pressure on the dollar.
Dr. Benjamin Amoah, Head of Financial Stability at the BoG, has said that the Central Bank has made significant progress in getting the yuan into the country�s currency trading system.
�Work is far advanced in getting the yuan into the system because we have seen that it is needed -- and demand always creates supply, so we are trying to make it available and we are working on it; very soon it will start. I don't want to put a time on it.
�Currently, the demand is for the yuan because a lot of people go to China,� he added.
According to the Chinese Embassy in Ghana, trade volume between China and Ghana has been increasing year-on-year to hit a little over US$2billion for the first time in 2010. In 2012, China-Ghana trade volume rocketed to US$5.4billion while available data for the first nine months of 2013, show that trade between the two countries reached US$3.8billion.
Meanwhile, the United States Department of Commerce has reported that goods traded between Ghana and the United States of America, which has been on the ascendency over the past decade, dropped for the first time from a little over US$1.6billion in 2012 to about US$1.4billion at the end of last year.
Already, some banks in the country have established relationships with Chinese banks in order to facilitate trade finance for their clients. Ecobank, for instance, has created a special Chinese desk in some of its branches.
Zenith Bank has also established a representative office in China. Societe Generale is also developing relationships with big Chinese companies.
Gilbert Hie, MD of Societe Generale said: �The government is very active in implementing the US$3billion transaction with China Development Bank, and we are also dealing with many Chinese companies like Sinopec, China Harbour who are very active in this country�.
He added that the bank will improve the organisation of its Chinese desk and will be recruiting Chinese nationals in order to take a bigger stake in this kind of project.
Mr. Hie believes that with Societe Generale�s strong presence in Asia and business relations with major Chinese companies, the yuan�s arrival is good for building synergy between Europe, Asia and Africa -- especially in Ghana.
�It is an arbitrage against the dollar, but that doesn�t mean it will all of a sudden replace the dollar. It will start gradually but it will increase with time. Trading of yuan will show the Chinese that we are very serious with our economy and respect them as investors, and SG is ready,� he said.
Mr. Asiedu of Zenith Bank said the bank has organised its operations to commence trading in yuan as it already has a representative office in China.
�For us, the coming of the yuan is good. Currently, we cannot deal in yuan because it is not a convertible currency; but when the Central Bank allows for yuan trading, then we will open a yuan account with the Central Bank and route everything through our representative office in China,� he said.
On the global market, the yuan overtook the euro to become the second-most used currency in global trade finance after the dollar last year, according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
The currency had an 8.66 percent share of letters of credit and collections in October, compared with 6.64 percent for the euro, SWIFT said in a statement. China, Hong Kong, Singapore, Germany and Australia were the top users of yuan in trade finance, according to the Belgium-based financial-messaging platform.
The yuan had the fourth-largest share of global trade finance in January 2012 with 1.89 percent, while the euro�s was the second-biggest at 7.87 percent, SWIFT said.
�It�s true that overseas exporters are using the renminbi -- another name for the yaun -- more as the contract currency to increase the attractiveness and competitiveness of goods or services sold to China,� said Cynthia Wong, the Hong Kong-based head of emerging-market trading for Singapore and Hong Kong at Societe Generale SA.
The US dollar led all currencies with an 81.08 percent share of letters of credit and collections in October, down from 84.96 percent in January 2012, according to data compiled by SWIFT. The yen slipped from the third most-used global currency to fourth over the same period, declining from a 1.94 percent share to 1.36 percent.
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