Amidst a persistently strong US dollar and fearful of shrinking foreign reserves, industry leaders in Bangladesh are hoping that Prime Minister Sheikh Hasina will successfully push the case for the use of the Chinese yuan in international transactions during his visit to China this week.

Bangladesh Bank, the central bank, in September 2022 said that authorised dealer (AD) banks could open accounts in Chinese yuan for letters of credit (L/Cs) and transactions with the foreign branches of local businesses. But only a handful of banks have taken up this option.

Cross-border transactions

"To bring a wider scope, it has been decided that ADs may maintain accounts in [yuan] with their correspondents/branches abroad for settlement of cross-border transactions executed in this currency," the central bank said in a circular.

This built on a 2018 move that allowed banks to open foreign currency clearing accounts with Bangladesh Bank in yuan.

Low uptake

But many banks are still not using the yuan for foreign transactions settling international trades according to the executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Mohammad Hatem.

"China is set to lead future global trade and is rapidly becoming the business hub of tomorrow. Therefore, we in the business community are pleased that trade in Chinese yuan will be discussed as one of the key issues during the prime minister's visit to China," he told The Business Post.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.