The Asian Development Bank (ADB) has revealed to GTR that it will add the Chinese renminbi (Rmb) and the Indian rupee (Re) currencies to its Trade Finance Programme (TFP) before the end of the year.
Since its launch in 2009, the TFP has only covered transactions denominated in US dollars, euros and Japanese yen.
Edward Faber, relationship manager, TFP at the Asian Development Bank, tells GTR that the bank had initially hoped to have rolled it out by now.
“We’re ready to bring them online and we’ve got board approval, but it’s currently being signed off by the internal treasury management. We hope to have it added most certainly before the end of the year,” says Faber.
The increasing volume of intra-regional trade transactions using Rmb, now the second most used currency in trade finance, and the rising Indian rupee, has incentivised the ADB to support deals denominated in these currencies. Faber says: “Our analysts think that there is even more trade that will be transacted globally in Rmb now.”
The TFP fills market gaps for trade finance by providing guarantees and loans to banks to support trade. Over 50% of the TFP’s portfolio has supported intra-regional trade and the addition of these two currencies will bolster the bank’s ability to further enhance its support for trade within developing Asia.