Australia and China reach a currency trading agreement

Discussion in 'Forex' started by Xspurt, Apr 8, 2013.

  1. WESTPAC and ANZ banks will be the first to directly trade Australian dollars into Chinese yuan under a landmark currency deal that will begin on Wednesday.

    On a visit to China's financial capital of Shanghai, Prime Minister Julia Gillard said it was the next important step in economic relations.

    "This is a strategic step forward for Australia as we add to our economic engagement with China," the PM said.

    "This is a huge advantage for Australia. Not only for our big businesses but also for our small and medium enterprises hat want to do business here."

    "All of This is about growing our economic exchange between australia and china . That's good for Austraian jobs, good for Australian growth."

    ANZ and Westpac have been granted licences by the People's Bank of China for direct trading.

    Westpac chief executive Gail Kelly and ANZ boss Mike Smith, in Shanghai for the announcement, said they were delighted.

    "This takes cost out and makes it a whole lot more convenient," Ms Kelly said.

    "This is a strategic development and really does signal a deepening of relationships between China and between Australia, it signals deepening of trade connections and great opportunities for future growth."

    Mr Smith said it would make trade documents far simpler for business by cutting out the complexity of needing to convert first to US dollars.

    "On behalf of ANZ as Australia's largest bank in China we are delighted with this development," Mr Smith sid.

    "It's another step in the progress towards deeper ties between both countries in terms of the economic and business development."

    Ms Kelly said it was a great opportunity for Westpac customers.

    Ms Gillard calmed concerns it could push up the value of the already high Australian dollar.

    "It won't have an impact on the level of the dollar," she said.

    Under the deal, the Australian dollar will for the first time be directly convertible into Chinese yuan, without going through the US dollar as happens now.

    Australia will have the third currency in the world that can be directly traded, after the US dollar and the Japanese yen.

    Loosely translated into English, the renminbi means 'people's money'.

    It is the official currency of China and its base unit is the yuan.

    At present, one Australian dollar buys around 6.4 yuan.

    Westpac has been operating in China for about 40 years and has full branches in Shanghai and Beijing.

    ANZ is Australia's largest bank in China.
  2. gmst


    Does this development has an implication (albeit small) regarding the role of USD as world's reserve currency?
  3. thanks for the post Xspurt

    by Tyler Durden on 03/31/2013 12:46 -0400
    . . . "Over the weekend, Australia appears to have come to the same conclusion,
    with the Australian reporting that the land down under is set to say goodbye to the
    world's "reserve currency" in its trade dealings with the world's biggest marginal
    economic power, China, and will enable the direct convertibility of the Australian
    dollar into Chinese yuan, without US Dollar intermediation, in the process "slashing
    costs for thousands of business" and also confirming speculation that China is
    fully intent on, little by little, chipping away at the dollar's reserve currency status until
    one day it no longer is."

    watched a news report about Chinese construction in an African country where the
    Africans were complaining about being paid at Chinese rates. in Canada Chinese
    workers were 'imported' to work in a Chinese owned coal mine - highest death rate
    industry in China - which was approved by the BC government but is being challenged
    by 2 unions - pay, benefits. the Chinese have taken major steps in obtaining what
    they want/need - copper, crude oil, coal (lumber ?) - they're taking over the world and
    haven't had to fire a shot

    any fx brokers offering renminbi-yuan/. . . pairs to trade ?
    there's a Chinese Renminbi-US Dollar futures contract
  4. "it would make trade documents far simpler for business by cutting out the complexity of needing to convert first to US dollars."

    That can't be good for king dollar reserve status.

  5. let say in laymans term, now for pairs that has the AUD will it make it stronger or weaker? when will the effect take place? like is there any theories about it? :D :D what should we expect :D
  6. official Aus China fx exchanges begin today
    the aus should rally and maybe make new highs
  7. I'm long from 432

    with a limit in to buy the same amount at 1.04655

    if my limit never gets hit, oh well, I'm making money

    I have other things going on, if one of those gets hit I will cancel and replace the AUD.USD buy limit (maybe higher, maybe lower.)
  8. I'll buy some AUD/USD if we get a strong weekly close. Stop at weekly low.

    Classic TA haters, perfect fading op. Speak now or forever hold your peace.