China enters into currency swap arrangement with Pakistan

Was implemented May 7 after issuance of necessary instructions to banks.

The bilateral currency swap arrangement between the State Bank of Pakistan and the People's Bank of China amounts to RMB10 billion and Rs140 billion.

The landmark bilateral CSA was signed by SBP Governor Yaseen Anwar and PBOC Deputy Governor DU Jinfu in December.

The CSA between the two central banks gives a positive signal to the market on the availability of liquidity of each country's currency in the onshore market. The arrangement will augment the pool of liquidity available to finance bilateral trade between the two countries, supplementing available sources of liquidity.

SBP has decided to conduct competitive auctions of the renminbi loan facility. In order to provide sufficient lead time for banks to arrange on-lending of renminbi to importers and exporters, the first auction will be conducted on June 4 with settlement on June13.

All banks are expected to educate their customers on the additional option of denominating their trade documents in renminbi. The objective of the CSA is to promote bilateral trade and investment between the two countries in the respective local currencies.