China and UAE ditch US Dollar, will use Yuan for oil trade

[HongWu]

Watch out UAE, the last time Iraq tried to sell oil in non-USD, USA invaded it! UAE will need Chinese help to protect itself from a USA and Israeli invasion!

 

[Mosamania]

Watch out UAE, the last time Iraq tried to sell oil in non-USD, USA invaded it! UAE will need Chinese help to protect itself from a USA and Israeli invasion!

They can't. We play flawless diplomacy.

 

[Al Bhatti]

January 18, 2012

China signs currency swap deal with UAE

China and the United Arab Emirates signed a multibillion-dollar currency swap deal in the latest indication of the growing political and economic links between Beijing and countries in the oil-rich Gulf region.

The swap valued at RMB35bn ($5.5bn), the latest in a string of currency deals China has agreed with foreign nations, is effective for three years and will allow the central banks to draw on the local currency facility to ease bilateral trading.

The announcement, which came as the Chinese Premier Wen Jiabao visited the UAE for the first time as part of a three country-tour of Gulf oil states, acts as both a political statement to bolster China’s ties to the UAE, and a pragmatic measure to increase business with the Gulf’s regional trade hub.

“It makes a good deal of commercial sense,” said Ben Simpfendorfer, managing director at Silk Road Associates, the Hong Kong-based consultancy. “At the same time there are some political interests.”

China has set up currency swap agreements with more than ten countries, though few have been drawn down, prompting some analysts to suggest that they are more politically-motivated statements than measures to significantly boost trade.

Boosting Sino-Emirati relations comes at a time when major international business deals are developing in the UAE and oil prices are crossing $100 a barrel.

Abu Dhabi, holder of 7 per cent of the world’s proven oil reserves, plans to tender its precious oil concessions due to expire in 2014. Analysts have said that eastern companies are likely to challenge western companies such as Royal Dutch Shell, ExxonMobil, BP and Total, who currently hold the contracts.

“It’s both a gesture and a genuine part of their policy,” said Theodore Karasik, director of research and development at the Institute for Near East and Gulf Military Analysis in Dubai. “China is making huge inroads into the region and partnering with the UAE across a number of fields, not only in economics but in energy and this is part of the process.”

Despite the economic downturn, bilateral trade between China and the UAE improved last year. Trade in the first 11 months of the year grew to $32bn, a 38 per cent increase compared to the first 11 months of last year, according to official statistics.

China has over the past three years started to promote the use of the renminbi in international trade, seeking to reduce its reliance on the US dollar. However, so far, transactions in Chinese currency have been limited, partly because China retains strict limits on flows of the currency across its borders.

Bhanu Baweja, emerging markets currency analyst at UBS in London says that utilising the swaps is a slow process but they do provide an initial step towards renminbi invoicing.
Mr Simpfendorfer said: “What they’re doing is putting the infrastructure in place, by saying ‘we don’t want liquidity to be the obstacle’.”

The UAE may be a particularly tough market in which to shift trading away from dollars, considering the local currency, like most others in the Gulf, is pegged to the greenback. The Abu Dhabi-based central bank said in November that it had returned to buying dollars after replacing their reserves with bonds including Japanese government debt.

“It does theoretically help the ability to do yuan transactions here,” says Nick Stadtmiller head of fixed income research at Dubai-based Emirates NBD. “So far the amount of yuan transactions taking place in the UAE has been pretty limited.”

China signs currency swap deal with UAE - FT.com

 

[Chinese-Dragon]

Watch out UAE, the last time Iraq tried to sell oil in non-USD, USA invaded it! UAE will need Chinese help to protect itself from a USA and Israeli invasion!

Are you serious?

The chances of a US invasion against the UAE are next to zero. Try to be more realistic.

The USA is certainly not happy with the increasing influence of the Yuan, but their options in this scenario are currently limited to financial weapons not military ones.

 

[kawaraj]

too many hazing acts along the gulf area.

the stupid fat lazy Am0bully will finally reap its doom.

 

[Al Bhatti]

They can't. We play flawless diplomacy.

They work silently in the background and when everything is in place they show their cards. This is what i like about the governments in the GCC.

The GCC has come a long way since the early days to what it is now as an important player.

Unlike the governments of Pakistan they just say we will do this and we will do that and this and that (gosh they never get tired of this, ever) and in the end the country is where it was 60 years ago.

 

[Mosamania]

They work silently in the background and when everything is in place they show their cards. This is what i like about the governments in the GCC.

The GCC has come a long way since the early days to what it is now as an important player.

Unlike the governments of Pakistan they just say we will do this and we will do that and this and that (gosh they never get tired of this, ever) and in the end the country is where it was 60 years ago.

I agree with the first part but not the second part.

Just wanted to say if the Americans play Poker politics, Iranians play Chess politics, We play baloot xD

 

[below_freezing]

I'm starting to gain more respect for the Gulf Arabs.

It takes guts or insanity to do something like this, especially when your currency is pegged to the USD and there are US troops stationed in your country.

 

[Serpentine]

UAE must be stupid to go against us.

Why do you think the ones who don't want to trade with your currency are your enemy?Isn't that some kind of economical dictatorship?

 

[Mosamania]

I'm starting to gain more respect for the Gulf Arabs.

It takes guts or insanity to do something like this, especially when your currency is pegged to the USD and there are US troops stationed in your country.

Throughout history. People of Arabia have lived through Trade, For thousands of years we have traded across the world from China to Europe to Central Africa to Russia our wagon went everywhere. And so now business is good with China, previously business was good with the US but not anymore. So only natural to follow the best business opportunities.

 

[Mosamania]

Also I didn't understand how come people didn't see the importance of this:
http://www.defence.pk/forums/military-forum/156105-lamah-saudi-made-secure-data-link-system.html

Okay test your military know how and tell me what you think this system means?? Both military and politically wise.

 

[Al Bhatti]

Also I didn't understand how come people didn't see the importance of this:
http://www.defence.pk/forums/military-forum/156105-lamah-saudi-made-secure-data-link-system.html

Okay test your military know how and tell me what you think this system means?? Both military and politically wise.

جبتها ع جرحهم you understand who i mean.

 

[newdelhinsa]

Trading oil in currency other than USD by both is definitely a significant move, worth noticing.

 

[Hack-Hook]

well when we said all middle east look at us and then follow what we did nobody believed us.

well joking aside it was something that could be expected . specially as the recession in west
lengthen and no hope for economic improvement in near future.
It's what you call death with a thousand cut for Dollar.

 

[Alienoz_TR]

Another nail at USA's coffin. May Allah soon show us the withdrawal of USA from Muslim lands. Without US dollar, it won't support it's military bases around the globe anyway.