Thailand is reportedly considering loosening regulations on the use of China’s yuan for trade this year to help mitigate the impact of currency volatility, according to a deputy central bank governor on Thursday.
According to Reuters’s reports, Mathee Supapongse, deputy governor of the Bank of Thailand, said the bank is in discussions with the People’s Bank of China (PBOC) about increasing the use of the Chinese Yuan.
He noted that although China is Thailand’s largest trading partner, few transactions are settled in local currencies.
Since both countries have swap lines, there will be no issue with the volume of yuan used for trade settlements, Mathee said.
He added that the use of yuan wouldn’t pose any issues for the US because the yuan will not be able to replace the USD anytime soon.
Thailand’s exports contracted by 4.5% in the first quarter, far better than the expected 10% drop, with the sector expected to begin recovering in the second second half of the year.
Exports are expected to be -2.0-3.0% in 2Q23 before returning to growth in the third quarter, said the Thai National Shippers’ Council last week.
