The Chinese yuan has recently been designated as the fifth official currency of Kyrgyzstan. This development has significant implications for the prospects of yuan settlements in Central Asian countries

The growth of economic cooperation between the Central Asian countries and China, as well as the development of transit of goods and cargo along the Middle Corridor from China to Europe via Central Asia and the South Caucasus, and the growth of Chinese investments are gradually increasing the demand for settlements in the PRC monetary unit, the yuan. The National Bank of Kyrgyzstan has incorporated the yuan into the list of currencies for which an official exchange rate will be established. The decision will become effective on 1 September 2024. Consequently, the yuan will become the fifth official currency of the country.

It has been reported that the decision is due to two main factors: the strengthening of economic cooperation between Kyrgyzstan and China and the growing importance of the yuan in international currency markets.

The yuan is becoming a settlement and monetary policy instrument not only in Kyrgyzstan, but also in other Central Asian countries. Consequently, in August 2019, the National Bank of Uzbekistan (NBU) entered into a loan agreement with the State Development Bank of China (SDBC) to secure the inaugural credit line in Chinese yuan. The total value of the loan was 500 million yuan (equivalent to approximately $70 million). The agreement was formalised in Beijing during the fifth meeting of the Uzbek-Chinese Intergovernmental Committee on Cooperation.

Additionally, Kazakhstan is developing mutual settlements with China in yuan. In September 2022, the National Bank of the Republic of Kazakhstan and the People's Bank of China entered into a memorandum of understanding (MoU) that provides for the possibility of developing mutual settlements in the renminbi (RMB) in Kazakhstan. The document served to consolidate the agreements of the central banks on the subject of clearing and data exchange, as well as the development of cross-border settlements in national currencies. This constituted a novel phase in the reinforcement of bilateral collaboration between Kazakhstan and China in the financial domain.

It seems inevitable that shortly RMB settlements will also be in demand in the countries of the South Caucasus – Azerbaijan and Georgia. This is especially true in light of the increasing Chinese investments in the region. Given the scale of the project, the construction of the Anaklia deep-water port with the attraction of Chinese investments, it seems reasonable to suggest that the Chinese yuan will become one of the most demanded foreign currencies in Georgia.


Gulnara Safarli
Azerbaijan-Georgia-Turkey Strategic Partnership Information Support Centre

SR-CENTER.INFO