China and South Africa renew R74 billion currency swap for five years

The central banks of China and South Africa have extended their bilateral currency swap agreement for another five years. The People's Bank of China announced the renewal in a statement on Friday, October 30.

The swap line stays at 30 billion yuan, which is about $4.51 billion, or 74 billion South African rand.

What the agreement covers

The arrangement allows the two central banks to exchange their own currencies rather than settle through a third currency. The size and the five-year tenor were both retained in the renewal announced from Beijing.

The People's Bank of China put the yuan value against the dollar at 6.6552 to $1 in the same statement.

Why central banks keep swap lines open

Currency swaps of this kind give each side access to the other's money for trade and financial settlement. For South Africa, the line gives the Reserve Bank a standing facility in yuan. For China, it widens the pool of rand available to its institutions.

The renewal keeps one of Africa's larger economies tied into Beijing's network of bilateral swap deals, which has expanded across emerging markets over the past decade.

Details beyond the size and duration, including any change in the terms, were not disclosed in the statement.