Samoa traders will be able to purchase Chinese goods in Chinese currency, directly, within four to six weeks, according to a senior banking official from A.N.Z..
That’s instead of having to first pay the extra cost of converting Samoan tala into another foreign currency, usually the United States dollar. A.N.Z. bank announced yesterday that it was in the process of introducing direct currency relations across the Pacific Islands, including Samoa, to China.
“We have introduced the Renminbi to Papua New Guinea and Fiji already,” said Arjan Roukema, A.N.Z.’s Head of Global Markets Pacific.
“At the moment we are in the process of rolling that out to all the other Pacific Islands as well.”
Their presentation to business leaders at Tanoa Tusitala was part of the bank’s outreach programme to update customers about regional business trends and important developments, like introducing a new currency.
“That sounds very simple but it’s not so much,” Mr. Roukema told Samoa Observer. Currency exchange means complying not just with local regulators but also those in China as well, he said.
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Complications include the fact that China has a strong currency due to years of economic growth, and Chinese authorities were being careful not to open themselves up to currency speculators.
At the moment, he said, “China will only allow foreign customers to submit foreign currencies into China if it’s trade related.”
Such payments relied on having actual import receipts and other proof of trade activity. Mr. Roukema said that China wanted to move to a position of currency supply and demand but that some regulation is still justified.
“It’s a good development for us,” he said.
“We’ve seen a lot of new clients particularly in Fiji and Papua New Guinea, who have been able to negotiate some new terms of trade with their Chinese counterparts.
Mr. Roukema explained another advantage to dealing directly in Chinese currency would be reducing or “hedging” risks from sudden fluctuations in currency.
“They can more effectively manage their risk.”
Direct access to Chinese currency was important for Pacific Islands as the Renminbi “will become a trade currency at some time.”
Mr. Roukema also spoke on growth forecasts for 2014 across the Pacific, and understanding foreign exchange risk. Other speakers included Benjamin Pereira, Assistant Governor, Monetary Stability Group, from the Central Bank of Samoa, who gave an economic update of the Samoan economy.
The business breakfast was part of A.N.Z.’s Super Regional week, an opportunity to update customers around the increased trade between Samoa and China and the overall impact on the economy over the past 7 months of this financial year.
In a press release, A.N.Z. Chief Executive Officer Regional Samoa, Tonga and Cook Islands Mathew Fisher, said that “A.N.Z. is a regional bank with super regional connectivity to 33 markets across Asia and the Pacific, which is why we understand the various needs of our customers both local, regional and global”.
“The aim of this breakfast was to add value to our customers by providing awareness and insight into the trade flows across Pacific and globally” said Mathew Fisher.
It was the first A.N.Z. Samoa Economics Breakfast for the year.
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