Yuan Opens Direct Trading With New Zealand’s Dollar in Shanghai
March 19, 2014 8:00 am
China begins direct trading between the yuan and New Zealand’s dollar today as the world’s second-biggest economy advertises the usage of its currency in global trade and finance.
The action will aid trim down foreign-exchange deal expenditures between the two nations, the People’s Bank of China published on its website yesterday. The central bank set a reference rate for the currency pair of 5.2899 per New Zealand dollar today and yuan moves in Shanghai are limited to 3 percent on either side of the fixing. The onset of straight exchanging corresponds with a visit to Beijing by New Zealand Prime Minister John Key.
The New Zealand dollar became the fourth currency to exchange straightly versus the yuan in Shanghai, mixing with the U.S. Dollar, the Japanese yen and the Australian dollar. The U.K. and Singapore declared transactions with China in October to make their currencies convertible for yuan, which has overtaken the euro to rank second in terms of use for global trade finance.
“Direct trading with New Zealand will help boost the global usage of yuan through trade settlement and invoicing,” said Tommy Ong, executive director of treasury and markets at DBS Bank Hong Kong Ltd. “It will also contribute to lower transaction costs for companies since there’s no need to go through two currency pairs but one.”
Increasing Trade
Two-way trade between New Zealand and China skyrocketed 29 percent to NZ$18.86 billion ($16 billion) in the 12 months through January, government data show, with the Asian nation surpassing Australia to become New Zealand’s biggest trading partner. Australia & New Zealand Banking Group Ltd., Westpac Banking Corp. and HSBC Holdings Plc. received approval from the PBOC to play as market makers for the currency pair, the banks stated in its remarks.
“Direct trading will increase the integration between the New Zealand and Chinese financial systems, and deepen the economic relationship between the two countries,” Key, a former head of foreign exchange at Merrill Lynch & Co. said in an emailed statement.
New Zealand’s increasing trade with China means direct currency exchanging is vital for businesses, similar to the situation with Australia, which began direct Aussie-yuan trade last year, said Hugh Killen, Sydney-based global head of foreign exchange at Westpac.
“Aussie-yuan trade continues to grow rapidly onshore in China, we’re talking billions of dollars a day now,” Killen said today by phone. “China and Australia and China-New Zealand are both long-term growth stories. China is a strategic market for Westpac in foreign exchange, so it’s central to us in terms of long-term opportunities.”
Advancing Kiwi
New Zealand penned a free-trade agreement with China in 2008, clearing the way for boosted exports. New Zealand’s merchandise shipments to China climbed to NZ$9.97 billion in 2013, more than doubling since 2010, and accounting for about 20 percent of the tinier nation’s overseas sales, based from Statistics New Zealand.
Chinese demand for New Zealand’s exports aid pushed the kiwi higher almost 20 percent versus the dollar in the past three years, the largest surge among 16 major currencies. It achieved 86.40 U.S. cents earlier today, the best performing since April 2013.
South Korea, which also counts China as its largest export market, is considering looking for direct exchanging links between its currency and the yuan. Vice Finance Minister Choo Kyung Ho declared on February 18 that the government will aid the implementation of direct trading if needed as demand for yuan expands in the monetary markets and for exchange.
Yuan Band
China doubled the yuan’s trading band versus the U.S. dollar this week to 2 percent on either side of a daily reference rate set by the central bank, a move toward giving market forces a bigger role in deciding its exchange rate.
The PBOC also maintains its currency within 3 percent of fixings versus the Hong Kong dollar, the japanese yen, the euro and the British pound while a 5 percent ceiling applies to the Russian ruble and the Malaysian ringgit.
“Direct convertibility marks another milestone in the internationalization of the renminbi,” HSBC said in a statement on yesterday’s New Zealand dollar announcement. “Coupled with China’s recent move to widen the daily trading band of the renminbi, it further demonstrates the country’s determination to speed up its financial market reform.”
The yuan has pulled back 2.4 percent from its 20-year high of 6.0406 per U.S. dollar achieved on January 14, after skyrocketing 2.9 percent in 2013. At least five banks including Barclays Plc and Bank of America Corp. have cut down their yuan estimates this week, citing concern economic development is slowing and greater currency swings under a broader band. The yuan soared 0.02 percent today to 6.1910 in Shanghai.
The material has been provided by InstaForex Company – www.instaforex.com
China begins direct trading between the yuan and New Zealand’s dollar today as the world’s second-biggest economy advertises the usage of its currency in global trade and finance.
The action will aid trim down foreign-exchange deal expenditures between the two nations, the People’s Bank of China published on its website yesterday. The central bank set a reference rate for the currency pair of 5.2899 per New Zealand dollar today and yuan moves in Shanghai are limited to 3 percent on either side of the fixing. The onset of straight exchanging corresponds with a visit to Beijing by New Zealand Prime Minister John Key.
The New Zealand dollar became the fourth currency to exchange straightly versus the yuan in Shanghai, mixing with the U.S. Dollar, the Japanese yen and the Australian dollar. The U.K. and Singapore declared transactions with China in October to make their currencies convertible for yuan, which has overtaken the euro to rank second in terms of use for global trade finance.
“Direct trading with New Zealand will help boost the global usage of yuan through trade settlement and invoicing,” said Tommy Ong, executive director of treasury and markets at DBS Bank Hong Kong Ltd. “It will also contribute to lower transaction costs for companies since there’s no need to go through two currency pairs but one.”
Increasing Trade
Two-way trade between New Zealand and China skyrocketed 29 percent to NZ$18.86 billion ($16 billion) in the 12 months through January, government data show, with the Asian nation surpassing Australia to become New Zealand’s biggest trading partner. Australia & New Zealand Banking Group Ltd., Westpac Banking Corp. and HSBC Holdings Plc. received approval from the PBOC to play as market makers for the currency pair, the banks stated in its remarks.
“Direct trading will increase the integration between the New Zealand and Chinese financial systems, and deepen the economic relationship between the two countries,” Key, a former head of foreign exchange at Merrill Lynch & Co. said in an emailed statement.
New Zealand’s increasing trade with China means direct currency exchanging is vital for businesses, similar to the situation with Australia, which began direct Aussie-yuan trade last year, said Hugh Killen, Sydney-based global head of foreign exchange at Westpac.
“Aussie-yuan trade continues to grow rapidly onshore in China, we’re talking billions of dollars a day now,” Killen said today by phone. “China and Australia and China-New Zealand are both long-term growth stories. China is a strategic market for Westpac in foreign exchange, so it’s central to us in terms of long-term opportunities.”
Advancing Kiwi
New Zealand penned a free-trade agreement with China in 2008, clearing the way for boosted exports. New Zealand’s merchandise shipments to China climbed to NZ$9.97 billion in 2013, more than doubling since 2010, and accounting for about 20 percent of the tinier nation’s overseas sales, based from Statistics New Zealand.
Chinese demand for New Zealand’s exports aid pushed the kiwi higher almost 20 percent versus the dollar in the past three years, the largest surge among 16 major currencies. It achieved 86.40 U.S. cents earlier today, the best performing since April 2013.
South Korea, which also counts China as its largest export market, is considering looking for direct exchanging links between its currency and the yuan. Vice Finance Minister Choo Kyung Ho declared on February 18 that the government will aid the implementation of direct trading if needed as demand for yuan expands in the monetary markets and for exchange.
Yuan Band
China doubled the yuan’s trading band versus the U.S. dollar this week to 2 percent on either side of a daily reference rate set by the central bank, a move toward giving market forces a bigger role in deciding its exchange rate.
The PBOC also maintains its currency within 3 percent of fixings versus the Hong Kong dollar, the japanese yen, the euro and the British pound while a 5 percent ceiling applies to the Russian ruble and the Malaysian ringgit.
“Direct convertibility marks another milestone in the internationalization of the renminbi,” HSBC said in a statement on yesterday’s New Zealand dollar announcement. “Coupled with China’s recent move to widen the daily trading band of the renminbi, it further demonstrates the country’s determination to speed up its financial market reform.”
The yuan has pulled back 2.4 percent from its 20-year high of 6.0406 per U.S. dollar achieved on January 14, after skyrocketing 2.9 percent in 2013. At least five banks including Barclays Plc and Bank of America Corp. have cut down their yuan estimates this week, citing concern economic development is slowing and greater currency swings under a broader band. The yuan soared 0.02 percent today to 6.1910 in Shanghai.
The material has been provided by InstaForex Company – www.instaforex.com
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