Yuan and Australian dollar to start direct trading

Discussion in 'China' started by CCTV, Apr 9, 2013.

  1. CCTV

    CCTV Regular Member

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    Yuan-Aussie Direct Trading to Start April 10, Gillard Says - Bloomberg

    Yuan and Australian dollar to start direct trading | South China Morning Post

    [​IMG]
    China will start direct trading between the yuan and the Australian dollar from tomorrow, according to Australian Prime Minister Julia Gillard.

    The South China Morning Post had reported yesterday that direct trading would be allowed soon.

    Australia & New Zealand Bank and Westpac Banking had been approved by the People's Bank of China as market makers for the direct trading of the currencies, Gillard said in Shanghai yesterday. "This will be a huge advantage for Australia, not only for our big businesses, but also for our small and medium enterprises that want to do business here," she said.

    A formal announcement of the plan, which will see the Australian dollar become the third major currency allowed to have direct trading links with the yuan, would be made today, she said.

    China remained Australia's top trading partner in February, with transactions at A$9.7 billion (HK$78.1 billion). China took about a third of Australia's exports that month and is the major customer for iron ore and coal.

    The PBOC sets a daily reference rate for the yuan against the Australian dollar, based on market-maker prices. Direct trading means the fixing will be computed without involving a cross rate with the dollar.

    Direct trading would lower customers' costs by "a few basis points", ANZ chief executive Mike Smith said in Shanghai.

    "The effect is the convenience of being able to do this," he said. "For example, in a trade document, rather than going through the US dollar and having the movement of the currency over time, you can immediately lock in the exchange rate."

    Premier Li Keqiang took office last month and retained Zhou Xiaochuan as central bank governor, a vote of confidence in policies that include promoting the usage of yuan in global trade and finance. Zhou is seeking to reduce reliance on the US dollar, as China has accumulated US$3.3 trillion of foreign-exchange reserves, the world's largest.

    The yuan climbed to a 19-year high of 6.1986 against the greenback on April 2, prices from the China Foreign Exchange Trade System show.

    It was the 14th most-used currency in global payments in February, according to the Society for Worldwide Interbank Financial Telecommunication. It had a 0.6 per cent share, figures from the financial messaging platform show.

    The yuan-aussie direct trading was "an important step in the process of internationalising the renminbi", said Neville Power, the chief executive of Fortescue Metals. "Going forward, I see more opportunities to do direct trading in the renminbi."

    This article first appeared in the South China Morning Post print edition on Apr 09, 2013 as Yuan, Australian dollarto start direct trading
     
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  3. pmaitra

    pmaitra Moderator Moderator

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    This is great news from PRC. It is about time the US Dollar is given what is due to it - a cold shoulder.

    I wonder how many currencies INR trades with directly, apart from the US Dollar.
     
  4. badguy2000

    badguy2000 Respected Member Senior Member

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    when made_in_india are not so attractive to foreigners, INR is not so attractive to foreigners ,either.
     
  5. pmaitra

    pmaitra Moderator Moderator

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    I don't agree with that.

    A currency becomes a major trading medium if it satisfies most, if not all, of these characteristics:

    Source: Foreign exchange market - Wikipedia, the free encyclopedia

    It has got nothing to do with products being made in the country whose currency is in question.
     
  6. badguy2000

    badguy2000 Respected Member Senior Member

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    yous list is too long...

    in a word, the position of one currency is decided by the demand ....how large is people's demand of the currency is the decisive factors....


    Usually, the larger one country's export is ,the larger other's demand of its currency is ....
    UK once was the largest exporter ,then USA took its place after WWII.
    that is why UK pound dominated the world before WWII and USD dominate the world after WWII.

    now, the same logic still works
    while CHina is growing the largest exporter , the demand of CHina's RMB is growing rapidly too.


    it is just a matter ot time that CHina's RMB is to take the place of USD.
     
  7. pmaitra

    pmaitra Moderator Moderator

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    Volume of trade does matter, yes, I agree. I think this is summarized in the OP:

     
  8. drkrn

    drkrn Senior Member Senior Member

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    isn't china's currency renimbi? and japan's is yuan
    why would china trade in yuan??????
     
  9. Razor

    Razor CIDs from Tamilnadu Senior Member

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    Renminbi means "people's currency".
    Yuan is a unit of the renminbi. Historically yuan was used in China to denote money and I believe the word renminbi was introduced by the CCP.
    And Japanese currency is Yen. The word "yen" is derived from Chinese "yuan".
     
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  10. amoy

    amoy Senior Member Senior Member

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    Ya, in Korea, it's pronounced Won with the same character.

    Actually Chinese use the root "Yuan" for many other currencies too - such as, Aoyuan for AUD, Meiyuan for USD, Gangyuan for HKD.

    Yuan means round-shape [​IMG]
     
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