ECONOMYNEXT – Sri Lanka is happy to expand trade with the Renminbi, but China’s exporters still demanded US dollars, Central Bank Governor Indrajit Coomaraswamy said.
“Chinese exporters want dollars, they do not want Yuan,” Coomaraswamy told reporters after questioned why Sri Lanka was not trading more with Chinese currency, quoting recent remarks from the Chinese envoy to Colombo urging greater use of the Renminbi. “We are very happy to trade with the Yuan.”
He said Sri Lanka’s Central Bank had a credit line to provide Yuan.
“Five or 10 years down the line, Yuan (Renminbi) is going to be much more important,” he said.
The Renminbi is still a pegged currency, which is prone to balance of payments troubles and some knee-jerk exchange restrictions as recent soft-pegged troubles in the country showed.
The People’s Bank of China spent hundreds of billions of dollars to shore up Renminbi and sterilize interventions, showing conclusively that it is still a pegged currency, analysts say.