The Chinese Foreign Exchange Transaction System (CFETS) has announced that direct transactions between the Yuan and the Turkish lira will begin on Dec. 12. Authorities from the Chinese central banks announced that there is not a technical or legal obstacle to using local currencies as a medium of exchange in foreign trade transactions and the first currency swap was executed on Nov. 30.
According to a statement released on CFETS’s official website, with the authorization of the People’s Bank of China (PBoC), direct trading will be launched between the yuan and the Turkish lira in the interbank foreign exchange market as of Dec. 12.
Thus, the members and institutions operating in the interbank foreign exchange market will be able to run their Turkish lira transactions in the spot, forward and swap markets directly with the yuan. In this context, market makers will also realize the direct transactions between the yuan and the Turkish lira in the interbank foreign exchange market.
Authorized by the PBoC, CFETS will be responsible for providing operational and technological support for the direct transactions between the yuan and the Turkish lira in the interbank market and will issue the yuan-Turkish lira parity each trading day. Additionally, a plus or minus 5 percent fluctuation will be allowed in the yuan’s transaction price against the Turkish lira.
The activation of direct trading between the two currencies is aimed to encourage bilateral trade and investment between Turkey and China, to facilitate the use of the Turkish lira and the yuan in cross-border trade and investment, and to meet the needs of economic units in order to reduce the cost of currency conversion.
Six other currencies with which PBoC will launch direct trading in addition to the Turkish lira (TRY) as of Dec. 12 also include the Polish zloty (PLN), the Swedish krona (SEK), the Mexican peso (MXN), the Norwegian krone (NOK), the Danish krone (DKR) and the Hungarian forint (HUF).