Standard Chartered Bank East Africa has called on businesses to adopt new Chinese currency which the International Monetary Fund (IMF) added to its elite basket of reserve currencies last month.
Standard Chartered Bank East Africa CEO Lamin Manjang said the ongoing internationalization of the renminbi, RMB, is expected to significantly cut the cost of doing business on the Kenya-China trade corridor by eliminating the foreign exchange costs associated with settlement of trade obligations.
"Importers and exporters who use the renminbi have the opportunity to mitigate risks and reduce costs associated with the three-way foreign exchange from Kenya shilling to the U.S. dollar then Chinese Yuan when trading with China," Manjang told the bank's clients in Nairobi.
"We expect suppliers to lower their prices to reflect lower foreign exchange costs," Manyang said in remarks published in the local daily on Wednesday.
The inclusion of the Chinese yuan, which marks another step in China's global economic emergence, came after the IMF on December 1, 2015 evaluated the Asian nation's standing as an exporter and the yuan's role as a "freely usable" currency.
This is the first time in over 15 years that the list of currencies comprising the Special Drawing Right (SDR) has been altered by the IMF.
The fund's Chief Executive Christine Lagarde said while making the approval in December last year that the decision was an important milestone in the integration of the Chinese economy into the global financial system.
The Chinese currency is set to join the euro, U.S. dollar, British pound and Japanese yen.
Manjang said the increased global usage of yuan is expected to cut the cost of doing business between Kenya and the Asian nation, adding that the adoption of the currency by local companies and traders in Africa and the Middle East has been gradual, but positive.
Manjang said the internationalization of the RMB continues to give emerging markets an important alternative when it comes to currency investment and hedging.
