Cosco switches to renminbi-priced contracts

Chinese shipbuilder Cosco Corp has begun quoting sales contracts in renminbi to cut back on its exposure to the declining US dollar, the Wall Street Journal reported. The Singapore-listed company, which is part of the Cosco Group, holds contracts valued at US$6.5 billion but pays staff at its Chinese shipyards in renminbi. As of March 29, the renminbi had appreciated 4.3% against the US dollar, an annualized rate of 17.4%. It is uncertain how Cosco’s customers, many of whom are based in Europe or elsewhere in Asia, will respond to the change given that the Chinese currency is widely expected to rise further. Payments will still be made in US dollars but the exact figure will depend on the exchange rate at the time the order is completed.