Cross-currency letters of credit gaining popularity in Asia

Divergent central bank policies see CNH LCs increasingly used to cover USD invoices

Dealers in Asia are seeing increasing interest in cross-currency letters of credit (LCs), with users looking to take advantage of preferable interest rates to finance dollar-denominated trade with foreign currencies.

Letters of credit are a common trade finance product issued by banks and serve as a buyer’s guarantee of payment to the seller until the final invoice is settled. The currency of the