The United Arab Emirates has seen an increase in the use of Chinese Renminbi for making direct payments, a new report has found.
According to data from payment tracker SWIFT, the UAE and Qatar are the most active Middle East countries using the RMB for dealings with China and Hong Kong.
In 2015, the UAE’s use of the RMB accounted for 74 per cent of payments by value to China and Hong Kong – up 52 per cent compared to 2014.
Meanwhile the Chinese currency was used for 60 per cent of all payments in Qatar, recording a year-on-year increase of 247 per cent.
However, the majority of payments between the Gulf states and China and Hong Kong take place in US dollars and are subsequently intermediated, mainly by USD clearing banks, the report added.
“The use of the RMB has been rising across the Middle East region over the last few years,” said head of Middle East, Turkey and Africa at SWIFT Sido Bestani.
“Adoption has been supported by developments such as the establishment of an RMB clearing centre in Qatar last year – the first in the Middle East – and the recent memorandum of co-operation signed between the People’s Bank of China and the UAE Central Bank to set up RMB clearing arrangements in the UAE.”
Last month, the UAE also renewed a RMB 35bn ($5.42bn) currency swap deal with China during an official visit by Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al-Nahyan to Beijing.
“We anticipate these and similar efforts will continue to drive RMB adoption across the region,” added Bestani.
The RMB is the fifth most active currency for global payments by value and accounted for 2.31 per cent of global payments in December 2015 – up from 2.28 per cent in November.