KARACHI: The governor of Pakistan’s central bank, Jameel Ahmed, said on Friday the use of Chinese currency, Renminbi (RMB), to settle cross-border trade and investment transactions could further strengthen economic and financial ties between the two countries.

He made the observation at an event arranged by the Industrial and Commercial Bank of China (ICBC) in Islamabad to mark its designation as the RMB clearing agent in Pakistan by the Peoples Bank of China.

Ahmed said the State Bank of Pakistan (SBP) had put in place the required regulatory framework to facilitate the use of the Chinese currency in trade and investment transactions while keeping in view the importance of his country’s economic ties with China.

The local business community can now open letters of credit and avail financing facilities in RMB under the framework.

“In terms of regulations in Pakistan, RMB is at par with other international currencies, such as the US dollar, euro and Japanese yen,” the SBP governor was quoted as saying by an official statement. “Both public and private sector enterprises in Pakistan are free to choose RMB for bilateral trade and investment activities.”

The statement informed that as a result of the central bank’s efforts to promote RMB’s use in trade with China, it denominated imports had increased from about two percent in FY18 to around 18 percent in FY22.

The SBP governor said banks could play a major role by providing their customers with the necessary information pertaining to the regulatory framework in China to conduct transactions in RMB.

He also expressed hope that Pakistani businesses would enhance their understanding of the Chinese market and evaluate the benefits of conducting trade in RMB at a more competitive pricing.

He reiterated that the central bank was committed to providing the policy and regulatory support to further strengthen economic and financial ties with China for the mutual benefit of consumers and businesses in both countries.