The State Bank of Pakistan made a rather strange announcement a few days ago. A notice by the bank informed the public that the bank had carried out comprehensive policy related measures to ensure that both private and public sector enterprises could use the Chinese yuan for bilateral trade and investment activities. Even more puzzling to financial circles was the earlier announcement by the Foreign Office spokesperson that the two countries would "actively" use bilateral currencies for trade and investment. The problem is that the bilateral currency swap agreement between the two countries was signed during the time of prime minister Yousaf Raza Gilani well over six years ago. Apparently, that never really took off, with Chinese traders refusing to accept Pakistani currency for any kind of swap or otherwise.
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WNU Editor: The above First Post analysis of this agreement is spot on. My immediate reaction when I read this announcement of a currency swap between the two countries was to scratch my head and say to myself that it does not make sense. It has already been tried, and it failed because Chinese traders refused to accept Pakistani currency for any kind of swap or otherwise. So why try again? My guess is that the Chinese government made the decision to make this work by providing guarantees to Chinese traders (i.e. securing any transaction), and in return demanded and received major concessions from Pakistan. As to what are those concessions .... maybe this .... Pakistan Is In Talks With China For The Chinese To Build Their Second Overseas Military-Naval Base Near The Pakistani Port Of Gwandar.
3 comments:
Pakistanis dropped the US "partnership" quicker than a hot potato. I think this tells us a few things
1) 2018 will be quite a ride
2) cold war between China and US will range from politics to currency dominance to military
3) this has been long in the making
4) the countries where China succeeds in buying influence: north Korea, an African country,Philippines and Pakistan. ..where it fails: almost wherever people are free/have democracies or corrupt dictators/tough men who kill and execute rather lead by freedom of thought and inspiration.
5) so this is it. .the division lines are: you can either live free or be ruled by China. On which side will the new Russia stand? I hope with the free. It'll change where the World will be heading. A place where we are all equal, or all ruled by China
The real reason for this move is US cutting financial support from Pakistan , and putting it's name in watch list , any observer will know thing are just going from bad to worse for Pakistan , this measure will pretty much isolate Pakistan from US coming financial measure ,
Of course Pakistan will be under Chinese mercy , but unlike the US agenda ( democracy reform etc) china has one thing economic agenda ( silk road) . Other countries will be watching carefully , if this deal was good to Pakistan ( i e security and economically ) other countries will follow suit . other countries seem on the same path ( Indonesia and Russia ) , this is a sign of the time , the bigger loser is the US and whoever stuck a round with the US
Anon, this has nothing to do with the US cutting financial support to Pakistan. But, the US cutting financial support to Pakistan likely has something to do with this deal. Think about it, do you really think the Pakistanis and Chinese negotiated this deal in the past few days??? This has been in the making for a lonnggg time. It takes time to negotiate something like this.
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