Shanghai-based New Development Bank seeks to finance more infrastructure projects in local currency to avoid forex fluctuations
- The multilateral lender founded by BRICS countries aims to offer 30 per cent of its loans in local currency, up from 22 per cent at present
- The drive comes at a time of heightened geopolitical tensions following Russia’s invasion of Ukraine and souring Western relations with China
Dilma Rousseff, president of the Shanghai-headquartered lender, told the bank’s annual meeting on Tuesday that it envisions 30 per cent of loans being offered in local currencies, up from 22 per cent at present. It currently uses the US dollar for most of its financing.
Anil Kishora, vice-president and chief risk officer, later told reporters at a media briefing on Tuesday that the goal would be achieved within five years.
“We need to create a diversified global currency system,” Rousseff told the briefing. “In the future, it is unlikely that one single currency can dominate the world’s currency system. We will see more local currencies used to settle trade.”
The president’s statement on local-currency financing comes at a time of heightened geopolitical tensions following Russia’s invasion of Ukraine and souring Western relations with China.