Sri Lankan intimate apparel maker MAS Intimates has made the country's first ever payment in Chinese Renminbi (RMB) to a supplier in China after the Chinese currency was allowed for cross border trade.

HSBC Bank which settled the deal told Lanka Business Online (LBO) that Sri Lanka's central bank had allowed the use of Renminbi for cross border trade on 29 June.

HSBC said MAS Intimates, a unit of Sri Lanka's MAS group had paid for knitted fabric imported from China with Renminbi, an LBO report said yesterday. The MAS group makes lingerie for brands like Victoria's Secret and imports fabrics from China.

"From the inception of our business we have been importing raw materials from the far east.  Until now all of these transactions have been done in US dollars," Mahesh Amalean, chairman, MAS Holdings was quoted as saying in a statement.

"Increasingly, in the last 10 years raw materials have been coming from China. We are pleased that we can now execute currency transactions in RMB (Renminbi).

"We firmly believe that this initiative will increase our cost competitiveness in the future."

HSBC told LBO it is expected that 30% of China's trade will be settled in Renminbi in 5 years.

"We've been working towards completing our first RMB transaction for some time now and this represents a milestone for Sri Lanka in terms of doing business with China," Nick Nicolaou, chief executive officer HSBC Sri Lanka said.

"Given that HSBC is the biggest international bank in China, we have been able to capitalize on this opportunity.

Chamira Wijetilleke, Head of Corporate Banking said Renminbi denominated trade will continue to grow leading to a demand for such services.

Source: Lanka Business Online