South Korea is reportedly planning to establish offshore RMB trading center as renminbi has become the second most popular foreign deposit besides the US dollar in the country.
Most recently, South Korea and China sealed a pact, whereby both countries have agreed to start direct trading between the Won and the Yuan in Seoul and promote greater use of the Chinese currency, Bloomberg reported.
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South Korea and China also agreed will co-operate to set up required infrastructure that will allow the Won to be directly exchangeable for Yuan in Shanghai.
A statement issued by the Bank of Korea and the finance ministry was cited by Bloomberg as saying that South Korea also won an RMB80billion (US$12.9billion) quota for domestic investors to buy securities in China under the Renminbi Qualified Foreign Institutional Investor program.
The establishment of a Won-Yuan market will allow South Korea to settle the bilateral trade in RMB, thereby helping it slash appreciation pressure against the US dollar by curbing inflows.
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