The Dubai Gold & Commodities Exchange (DGCX) said it had agreed to collaborate more closely with two of China's biggest banks in a move that could pave the way for transactions to be cleared in the yuan and attract more interest from Chinese investors.
The DGCX has agreed with Industrial and Commercial Bank of China (ICBC), China's largest lender, and Agricultural Bank of China to cooperate on product development, the exchange said in statements on Wednesday.
ICBC will support cross-border derivatives business in the Middle East and Asia and explore the possibility of becoming a settlement bank with the DGCX's clearing house, which "would eventually support clearing of RMB (yuan) products", the exchange said.
Another top Chinese bank, Bank of China, became a settlement bank for the exchange's clearing house last month.
The United Arab Emirates said in December it planned to establish a centre for clearing transactions in the yuan, which would conduct all stages of transactions in the currency. Last year, Qatar opened the region's first such centre.
The DGCX did not elaborate on what yuan products it might develop. In December, it launched yuan futures contracts allowing investors to bet on movements in the Chinese currency, but those contracts are settled in U.S. dollars.
The exchange also launched spot gold contracts in December, enabling investors to buy and sell physical 1 kilogramme bars. For the first quarter of this year, it reported a 37 percent year-on-year rise in trading volume of all contracts combined, to over 4.5 million contracts.For all the latest market news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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