The People's Bank of China triggered a scramble among lenders around the world when it began easing controls on the yuan's international use in 2010.
Scramble to join China bandwagon
The People's Bank of China triggered a scramble among lenders around the world when it began easing controls on the yuan's international use more than two years ago.
In the UAE, HSBC completed the Middle East's first cross-border yuan trade transaction in September that year. A month later, Standard Chartered became the first foreign bank in the region to open a yuan account for a customer. The Rivoli Group, a luxury retail chain headquartered in Dubai, wanted to enable visiting Chinese consumers to pay for goods in their domestic currency.
Now local banks are looking to carve out a slice of the action. Mashreq, in July, became the first local bank in the Middle East to offer offshore yuan services. Several others are believed to be considering similar steps.
Increasing use of the yuan in the UAE is a reflection of the global trend. Worldwide yuan transactions have risen 17-fold since October 2010, faster than any other currency.
The yuan is likely to receive a further boost as China considers other ways to give it more international muscle.
In 2009, Hong Kong became the first testing ground outside mainland China for a freer yuan and sales of yuan bonds in the city have since risen. The Dubai International Financial Centre has also been discussing plans to permit transactions in the currency, Hamad Buamim, director general of Dubai Chamber of Commerce and Industry said.