April 2, 2014 / 5:18 PM / 5 years ago

Currency swap deal to help Chinese business in Albania

TIRANA, April 2 (Reuters) - Albania’s central bank is set to offer local banks the use of a 250 million euro ($344 million) currency swap line to encourage trade and investment between Albania and China.

Central bank governor Ardian Fullani said on Wednesday the currency swap deal was part of the financial infrastructure it was building to “attract as much as possible direct Chinese investment” in Albania.

The swap deal allowing an exchange of the Chinese renminbi with the Albanian lek was agreed between Fullani and Zhou Xiaochuan, the governor of China’s Central Bank in September last year. In the future, the size of the instrument could grow.

“The participants in the market of both countries, especially the Chinese investors, must feel more secure about adequately satisfying their needs for liquidity,” Fullani told a meeting with commercial banks, most of them foreign-owned.

“I advise you to take the necessary measures for building a solid platform to ensure the growth of the volume of trading and financing between you and Chinese counterparties, and consequently between Albania and China.”

Fullani said the central bank would take steps to ease the movement of funds between the two countries and would not pass on to the banks any added mediation costs.

Just 5 percent of Albania’s exports, mostly chrome ore, went to China in 2013, while 6.7 percent of imported goods came from China, a much smaller share than from European neighbours.

Communist-era Albania depended heavily on Beijing for support after splitting with the Soviet Union in the 1970s but their relationship deteriorated after 1978 as China began opening to the West and Tirana retained an isolationist stance.

Since Communism fell in Albania in 1990, Chinese investments have been largely absent except for a small community of traders and a few Chinese restaurants. The government is currently wooing Chinese companies to build a big port in northern Albania. ($1 = 0.7263 Euros) (Reporting by Benet Koleka, Editing by Catherine Evans/Ruth Pitchford)

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