UAE, China agree to set up RMB clearing hub

DUBAI - The United Arab Emirates (UAE) has signed an agreement with China to set up a clearing hub for the Chinese currency Yuan or Renminbi (People's money), local UAE media reported on Sunday.

The UAE clearing hub for the Chinese currency, which will satisfy growing needs among UAE-based firms and banks alike, will be the second in the Middle East after the Gulf state Qatar set up the region's first Renminbi clearing hub this April.

According to report, the UAE's central bank said that the agreement was signed while Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al-Nahyan was in China for an official visit earlier this month.

No specific date was revealed when the hub will open for trading. The UAE, a major oil supplier, and China also renewed a 35-billion RMB ($5.42 billion) currency swap deal during the visit.

The UAE was also included in RMB Qualified Foreign Institutional Investor scheme. Known as RQFI, the Gulf state was given a quota of 55 billion RMB ($8.53 billion or 31.3 billion UAE dirham).

Earlier in the year, ICBC, the world's largest bank, listed a 500 million dollar bond, the first dollar bond by a Chinese lender in the Middle East, on the Nasdaq Dubai, the international capital market which is located in the DIFC.

Zhou Xiaodong, general manager ICBC Middle East, told then Xinhua he hopes for more Chinese firms to follow and to list bonds on Dubai in order to create a liquid market in Dubai as a financial link between the Middle East and East Asia.

In 2014, China, surpassing India, became the biggest trade partner of the UAE as bilateral trade hit nearly 50 billion dollars. Government officials estimate bilateral trade to have surpassed $60 billion in 2015.

Now, more than 4,000 Chinese firms run branches in the UAE, among them the four biggest Chinese lenders ICBC, China Construction Bank, Agricultural Bank of China and Bank of China. Over 300,000 Chinese citizens reside in the Gulf Arabian state.