Yuan currency trade accepted in Indonesia

JAKARTA, Nov. 11 (UPI) -- Indonesia Wednesday became the sixth ASEAN nation where China will use its yuan currency to settle trade payments, it was announced.

The service was launched by the Hong Kong Shanghai Banking Corp. in Jakarta Wednesday. ASEAN stands for the Association of Southeast Asian Nations.

Other ASEAN countries using the yuan (Renminbi) trade settlement service are Malaysia, Thailand, Singapore, Vietnam and Brunei Darussalam, China's official Xinhua news agency reported.

The service is part of China's cautious effort to create a bigger global role for the yuan as the weakened U.S. dollar continues to be questioned as a world reserve currency. China holds the world's largest foreign exchange reserves of more than $2.1 trillion and is also the largest holder of U.S. debt.

"The Chinese government's policy to allow Renminbi as trade payment currency would improve the trade between the two countries," Vincent Sugianto, HSBC's head of trade, said.

Sugianto said the trade settlement service can only be conducted with Chinese firms authorized to make transactions with their counterparts in ASEAN countries. He said direct transaction using the Chinese currency with Chinese firms would reduce transaction costs and avert currency exchange risks.