UAE, Qatar Top Middle East Nations For Direct Renminbi Payments With China

Tom Burroughes

29 January 2016

Data from SWIFT, the global banking transaction network, shows that the United Arab Emirates and Qatar are the most active nations in the Middle East in using China’s renminbi currency to make direct payments with Mainland China and Hong Kong, highlighting how the currency is surging in use. Even so, the dollar continues to dominate cross-border payments.

In 2015, the UAE's use of the renminbi accounted for 74 per cent of payments by value to mainland China and Hong Kong, surging by 52 per cent compared to 2014. In Qatar, the renminbi was used for 60 per cent of all payments, skyrocketing 247 per cent compared to 2014.

However, looking at all cross-border flows worldwide, SWIFT said the majority of payments between these Gulf States and mainland China/Hong Kong are in dollars and subsequently intermediated, mainly by dollar-clearing banks.

Such data suggest that China is succeeding in building the renminbi into a global currency, part of a strategy that has seen it included in the International Monetary Fund’s SDR basket, for example. Other financial hubs, such as Zurich and London, are battling to win renminbi forex business.

"Use of the renminbi has been rising across the Middle East region over the last few years. Adoption has been supported by developments such as the establishment of a renminbi clearing centre in Qatar last year - the first in the Middle East - and the recent memorandum of co-operation signed between the People's Bank of China and the Central Bank of the United Arab Emirates to set up renminbi clearing arrangements in the UAE," Sido Bestani, head of Middle East, Turkey and Africa at SWIFT, said in a statement.

In December 2015, the Chinese currency remained stable in its position as the fifth most active currency for global payments by value and accounted for 2.31 per cent of global payments. That was an increased market share when compared to 2.28 per cent in November 2015. Overall, the value of renminbi payments increased by 15.92 per cent compared to November 2015, whilst in general all currency payments increased by 14.43 per cent.