To diversify its foreign exchange investment and strengthen financial relations, Nepal has signed a memorandum of understanding with China that paved the way for the former to invest in Chinese securities.
The MoU was signed by the visiting Deputy Governor of People's Bank of China, Hu Xiaolian, and Deputy Governor of Nepal Rastra Bank (NRB), Gopal Prasad Kafle, here in the presence of Governor of NRB Yubraj Khatiwada.
The agreement allows the national bank to invest up to 1.20 billion yuan (USD 200 million) in China's internal inter-bank securities market, the Nepal's central bank said.
The NRB said the agreement was signed as per its efforts to diversify its foreign exchange investment.
"It is expected to facilitate the trade payment system," stated the bank, adding that the move will be a milestone in strengthening financial relations between the two countries.
The central bank of Nepal will now open a Chinese currency account in People's Bank of China.
The Chinese central bank will be investing the money deposited in that account in Chinese securities, including Treasury bills, bonds and debentures on behalf of Nepal, according to the statement.
