Iraq to allow trade with China settled in yuan for first time

Iraq is planning to allow trade from China to be settled directly in yuan for the first time, the country's central bank said in a statement on Wednesday.

The move is the latest sign of the Chinese yuan's growing role on the international stage.

Iraq is joining major Middle Eastern economies including Saudi Arabia and the United Arab Emirates to explore using currencies other than the U.S. dollar in trade.

"It is the first time imports would be financed from China in yuan, as Iraqi imports from China have been financed in [U.S.] dollars only," Mudhir Salih, the government's economic adviser, told Reuters on Wednesday.

Iraq is the second-biggest producer in the Organization of the Petroleum Exporting Countries (OPEC) but Wednesday's measures will not extend to the oil trade, Bloomberg reported.

The Iraqi central bank has been taking urgent steps to compensate for a dollar shortage in local markets, which prompted the cabinet to approve a currency revaluation earlier this month.

The bank could, as part of its plan, boost the balances of Iraqi banks that have accounts with Chinese banks in yuan, it said in the statement.

The yuan has continued to grow in prominence globally in recent years. 

The renminbi's share in the global trade finance market hit 3.91 percent last December, almost doubling compared to 2020, according to the Society for Worldwide Interbank Financial Telecommunication, a global provider of financial messaging services known by its acronym SWIFT.

Read more:

BizDataDive: Chinese yuan's rise as global currency continues to gain ground

(With input from Reuters, cover via CFP)

Search Trends