BRICS banks to sign pacts to push forward local currency lending
China Development Bank (CDB) and its BRICS' counterparts will sign agreements Thursday to formalize co-operation in local currency lending, in a bid to further facilitate trade and investment among the 5 countries, said chairman of CDB Chen Yuan Wednesday.
Under the agreements, namely the Master Agreement for Extending Credit facilities in Local Currency, and the Multilateral Letter of Credit Confirmation Facility Agreement, each country will make its own currency loans available to other four member countries.
Using our own currencies to issue loans and settle payments can minimize exposure to exchange rate fluctuations, reduce our reliance on third-party currencies, and facilitate trade and investment, said Chen in a financial forum gathering of CDB and its Brazilian, Russian, Indian and South African counterparts.
Since our last gathering in Sanya, member banks have actively implemented the framework agreement on financial cooperation and established a technical working group on local currency lending, Chen added.
Trade among BRICS countries grew in the past decade. Statistics showed that from Y's 2001 to 2010, inter-BRICS trade rose with an average annual growth of 28%. Total trade among the 5 countries stood at US$230-B in Y 2010.
These 2 agreements will also be important outcome documents for this year's BRICS summit, bearing far reaching significance in deepening financial co-operation, commented Chen while attending a press conference later in the day.
Chen did not provide the amount of lending, but he believed that the sum will be considerable.
The pacts to be signed have also been applauded by bank leaders of other BRICS countries. The two agreements will for sure assist us in promoting our bilateral trade and investment and improve the trade facilities which we are extending to each other, Vladimir Dmitriev, chairman of Vnesheconombank, said after the forum.
It is important for BRICS countries to trade in an environment that is not volatile, particularly on currencies, Jabulani Moleketi, chairman of Development Bank of Southern Africa, said.
The action will reduce the currency risks and increase the trade and investment volume, Moleketi added.
Representatives from the CDB, BNDES of Brazil, Russia's Vnesheconombank, Export-Import Bank of India and the Development Bank of Southern Africa will sign the pacts on Thursday in the presence of the leaders of five countries.
Leaders from the BRICS bloc gathered in New Delhi for a 2-day annual summit under the theme of BRICS countries' commitment to the partnership of stability, security and prosperity. It is the 4 annual meeting of this mechanism.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.