Bank of China, China's fourth-biggest lender, is to be appointed the yuan clearing bank in Malaysia, two sources with knowledge of the matter said on Monday, following a deal signed between the two countries' central banks. China and Malaysia's central banks had signed a memorandum of understanding on Monday to establish a yuan clearing bank to be based in Kuala Lumpur, the first of its kind for the country, the People's Bank of China said in a brief statement on its website.
Bank of China and the Chinese central bank were not immediately available for comment. The clearing bank will benefit cross-border transactions, advancing trade and investment, the statement said. This is the latest in a series of deals to establish regional yuan hubs as China ramps up its efforts to internationalise the renminbi. China agreed over the weekend to a 200 billion yuan currency swap with Canada and to launch North America's first renminbi clearing bank in Toronto. Last week, Qatar became the first hub in the Middle East for clearing renminbi transactions.
The local Industrial and Commercial Bank of China branch in both countries will act as the clearing bank. Yuan edges up China's yuan rose against the dollar on Monday after the central bank set the midpoint to its strongest level since mid-March. Spot yuan traded at 6.1141 per dollar by midday, 0.14 percent firmer from the previous close. The People's Bank of China (PBOC) set the midpoint at 6.1377, up 0.4 percent from Friday's fix to its strongest level since March 19.
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