(Yicai) June 16 -- The central banks of China and Türkiye have extended their currency swap agreement and established a Chinese yuan clearing arrangement in Türkiye to boost bilateral trade and investment.

The revised deal, valid for three years, allows the exchange of up to TRY189 billion (USD4.8 billion), or CNY35 billion (USD4.9 billion), via local currency swaps between the two lenders, the People's Bank of China announced on June 13. The pair may extend the agreement upon expiring, it added.

The PBOC and the Central Bank of the Republic of Türkiye first inked a currency swap agreement worth CNY10 billion (USD1.4 billion), or TRY3 billion, in 2012. The two have renewed the deal several times since and gradually expanded the scale of the swaps.

After the outbreak of the global financial crisis in 2008, the PBOC began signing bilateral currency swap deals with the monetary authorities of other countries. The agreements stipulate that two parties can exchange each other's currencies under certain conditions for trade and investment settlement or to provide short-term liquidity support to their financial markets.

After extending the deal with the CBRT, the PBOC has signed bilateral currency swap agreements with the monetary authorities of 32 countries and regions, with a scale of around CNY4.5 trillion (USD626.4 billion).

In addition, China and Türkiye signed a memorandum of cooperation to establish a yuan clearing system in Türkiye, allowing the PBOC to authorize designated commercial lenders to carry out such clearing services in the country, serving local financial institutions, businesses, and individual customers, the bank noted.

Authorized yuan clearing lenders will provide many redback settlement options and solutions for economic and trade cooperation between China and Türkiye, according to analysts. The move will significantly enhance Türkiye's cross-border yuan service capabilities and clearing efficiency, addressing local currency settlement demand in trade and investment activities between companies from both countries, they added.

The yuan clearing arrangement was initially piloted in the Hong Kong and Macau special administrative regions in 2003 and 2004 and has since gradually expanded to major economies worldwide. The PBOC has authorized 34 yuan clearing banks in 32 countries and regions.

Editors: Dou Shicong, Martin Kadiev