WELLINGTON: The People’s Bank of China (PBC), China’s central bank, signed a bilateral currency swap agreement on Friday with the Reserve Bank of New Zealand, the country’s central bank.
The scale of the currency swap was kept at 25 billion yuan ($3.63), and the agreement will last for three years, according to a post on the PBC’s official website on Friday.
Currency swap is an arrangement in which two parties exchange specific amounts of different currencies at first, and a series of interest payments on the initial cash flows are exchanged.
The agreement was targeted at facilitating bilateral trade and investment between the two countries, the PBC statement noted.
Data from the General Administration of Customs showed that China’s trade with New Zealand has generated $4.6 billion from January to April, up 18.4 percent year-on-year.
New Zealand also actively participated in the China-proposed Belt and Road (B&R) initiative. On March 27, New Zealand became the first country in the South Pacific region to sign a memorandum of understanding under the framework of the B&R initiative with the Chinese government.
The Chinese government has expanded the scale of currency swaps to enhance cooperation along the B&R route. Ning Jizhe, vice chairman of the National Development and Reform Commission, said during a press conference on May 12 that China had signed currency swap agreements amounting to more than 900 billion yuan with up to 22 countries involved in the B&R initiative.
He also noted that nine domestic banks have set up 62 affiliates in 26 countries along the B&R route.
“The Chinese government is pushing domestic financial institutions to support the industrial cooperation projects (between China and countries involved in the B&R initiative) through various methods,” Ning disclosed at the conference.
