Bank of Communications designated as clearing bank for won-yuan trading in S.Korea

SEOUL -Bank of Communications of China was appointed as a clearing bank for the direct won-yuan trading in South Korea, the Bank of Korea (BOK) said Friday.

Citing the People's Bank of China (PBOC)'s announcement, the South Korean central bank said in a statement that the Bank of Communications will serve as a clearing bank in the market where the yuan will be exchangeable directly for the South Korean currency.

The PBOC and the BOK agreed Thursday to launch the direct won- yuan trading market in Seoul as early as this year to reduce transaction costs and foreign exchange risks.

To gain yuan funds now, South Korean companies and financial institutions should convert the local currency into the US dollar, before exchanging the dollar for the yuan mainly in Hong Kong, where exchange commissions were charged.

Meanwhile, Bank of China and the Korea Exchange, South Korea's main bourse operator, inked a memorandum of understanding (MOU) in central Seoul for cooperation in expanding the offshore yuan market.

Under the deal, the two sides will cooperate with each other when listing yuan-denominated financial products in the Korea Exchange, while jointly developing new financial products in the Chinese currency.

During a summit between visiting Chinese President Xi Jinping and his South Korean counterpart Park Geun-hye held Thursday, South Korea agreed to encourage local and foreign firms here to sell yuan bonds in the country in a bid to boost financial transactions in the Chinese currency.

A series of agreements were reached among South Korean and Chinese businessmen accompanying President Xi, who arrived here Thursday for a two-day state visit, his first trip to Seoul since he took office last year.

LG Chem, the world's largest maker of electric vehicle (EV) batteries, singed an MOU with Chinese authorities to set up a joint venture and build a factory in Nanjing for producing such batteries.

POSCO, South Korea's top steelmaker, agreed with China's Chongqing Iron & Steel to invest $3.3 billion and cooperate in the new steelmaking technology, cold-rolled steel plating and the mineral mines development.

SK Telecom, South Korea's No1 mobile operator, reached a strategic partnership with China's Zhengwei Group to cooperate in the cutting-edge information and communications technology.

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