A Rwandan Economic analyst Teddy Kaberuka believes that African economies would benefit deeper and wider if they adopted the chinese Yuan as a reserve currency.
It “completely makes sense” for Rwanda and other African countries to use the Chinese yuan as a reserve currency, especially for those transacting with China, said Kaberuka.
Financial officials from 14 Southern and Eastern African countries had in May at a forum agreed on the need to use the Chinese yuan as a reserve currency as China was playing an active role in their economies.
As Rwanda is transacting with many other countries, having more than one reserve currencies will benefit the country, said Kaberuka in an interview recently.
“The yuan will be very useful as the reserve currency helps to finance Rwanda’s imports mostly from China,” said Kaberuka.
An agreement between the two countries to facilitate transactions with each other and collaboration in the usage of the yuan will benefit the two countries, he said.
He also suggested China investing in the financial sector of Rwanda and Africa through Chinese banks, saying this will help the Rwandan economy access the Chinese economy, thus facilitating transactions between the two sides and help the central bank of Rwanda get the yuan.
According to Doreen Makumi, Corporate Communications Manager at National Bank of Rwanda, Rwanda has the yuan in its foreign reserves since 2016, as the yuan is becoming a global reserve currency and is part of special drawing rights basket of International Monetary Fund.
Including the yuan as part of the country’s foreign reserves are also motivated by the growing trade relationship between China and Rwanda, and for diversifying Rwanda’s foreign reserves, Makumi said.