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An agreement was recently signed by Amonatbonk, Tajikistan’s State Savings Bank, and China's National Development Bank to use Chinese currency for bilateral financial transactions.
TAJIKISTAN — All future financial transactions between Tajikistan and the People's Republic of China will use Chinese currency, as agreed on Oct. 15 by the chairman of Amonatbonk, Tajikistan’s State Savings Bank, Makhmadamin Makhmadaminov, and China's State Development Bank Chairman Chen Yuan.
Following the conclusion of their talks, the chairmen agreed to develop a five-year blueprint for the joint financing of various promising investment projects.
Tajik analysts give the agreement high marks, and view the move as beneficial to both China and Tajikistan, by spurring trade between the countries, reducing the cost of doing business and making trade payments more convenient.
Economist Karim Ismatov believes that China is likely to push the adoption of its own currency in trade with other smaller neighbours as an alternative to the U.S. dollar. "The yuan is quite capable of taking on that role in Eurasia, or at the very least in the Shanghai Cooperation Organisation, where China has much influence," the economist notes.
Ismatov points out that it is in China's interest to provide Tajikistan credit, as the Central Asian country will consent to pay interest rates higher than the international norm for government loans. It is no coincidence that Tajikistan accounts for nearly half of all China's investment in Central Asia.
"Tajik businessmen and bankers don't really care which convertible currency, dollars or yuan, they use for international transactions. Chinese investments and loans, which currently provide a financial lifeline to the country, are more important to them. The switch to the yuan will boost trade and economic cooperation between the two countries and in the next year or two, China stands to become Tajikistan's main trading partner," the economist concludes.