Internationalization of the renminbi

The largest Chinese state banks were busy this week selling US dollars for yuan, both in onshore and offshore foreign exchange markets, to slow down the depreciation of the yuan. While they also trade on their own behalf or to fulfill client orders, state banks often act on the central bank's instructions when the yuan is under pressure, as is the case currently.

The Turkish Central Bank (CBRT) and People's Bank of China (PBOC) expanded their swap agreement, which was signed in May 2019, by 35.1 billion Turkish liras ($4.12 billion) and 23 billion Chinese yuan ($3.59 billion).

Turkey's short-term external debt stock amounted to $134.6 billion as of the end of November, official data showed on Jan. 15. 

The country's external debt stock -- maturing within one year or less- rose by 9.5% in November versus the end of 2019, according to the Turkish Central Bank.

The official reserves of the Turkish Central Bank reached $98 billion in January, the bank announced on Feb. 28.

The Turkish Central Bank on Friday announced its official reserves amounted to $91 billion as of Nov. 30 of the current year.

Turkey has mandated the Bank of China, HSBC and the Industrial and Commercial Bank of China Limited (ICBC) to explore bond issuance opportunities in China’s Panda bond market, the Turkish Treasury stated on Feb. 21.

The International Monetary Fund on Dec. 20 approved the third installment of a $12 billion, three-year loan for Egypt, bringing the total released to date to just over $6 billion.

The Turkish unit of Chinese lender ICBC completed a 450 million Turkish Lira ($132.55 million) swap transaction at the end of November, banking sources said on Dec. 8, marking the first such deal under an agreement between the two countries.

China's foreign exchange reserves have fallen to their lowest level in more than three years, the central bank said Feb. 7, as Beijing sells dollars to stop the yuan from depreciating further.

China and Turkey will renew a currency swap deal and expand its scale, according to a statement released by the Chinese central bank on Nov. 16, as reported by Reuters. 

The scale of the three-year agreement will expand to 12 billion yuan ($1.88 billion), based on the mutual consent, the People's Bank of China (PBOC) said in a statement.