Direct yuan-A$ trade gets off to A$250m start
Australian prime minister says transactions point to great promise in two countries' future
Australian Prime Minister Julia Gillard said direct trading between the yuan and the Australian dollar totalled A$250 million (HK$2.04 billion) on the first day.
That is equivalent to about 70 per cent of daily commerce between China and Australia.
"It just goes to show what a great boon this is going to be for the future," Gillard said yesterday after returning from a visit to Australia's biggest export destination. "I'm very pleased that we were able to secure a number of new agreements with China, which really do take our relationship to the next level."
The Australian dollar became the third major currency to have direct trading links with the yuan on Wednesday after the US dollar and the Japanese yen.
China took about a third of Australia's exports in February and is its major customer for iron ore and coal exports.
Trade in goods and services between the two countries was valued at A$127.8 billion in the year to June 30, 2012, Australian government figures show.
The People's Bank of China (PBOC) announces a daily reference rate for the yuan against the Australian dollar at about 9.15am in Shanghai on each trading day, based on market-maker prices.
Direct trading means the fixing is computed without involving a cross rate with the dollar.
The yuan weakened 0.2 per cent to 6.5466 per Australian dollar as of 5.57pm in Shanghai, according to Bloomberg data.
The PBOC approved Australia and New Zealand Banking and Westpac Banking as market makers for the direct trading of the currencies, Gillard said in Shanghai on Monday.
"That's a very successful start to trading, and the area where I see the most potential is the small to medium enterprise area," said Robert Rennie, chief currency strategist at Westpac. "Currently there's about A$120 billion in two-way trade between Australia and China, so obviously the potential is high, but it's not yet clear how much of that will be transacted in yuan."
China surpassed the United States to become the world's biggest trading country last year, ending the US dominance in global commerce dating from the end of the second world war, according to the US Department of Commerce.
Reserve Bank of Australia governor Glenn Stevens said the renminbi (RMB) - the official name for the yuan - is likely to become Asia's dominant medium of exchange. "There could be a profound adjustment for many countries in the region from membership of what is, at present, a de facto US dollar zone, to membership of an RMB zone," Stevens told a symposium on Asia-Pacific financial market development in Sydney, according to the RBA's website yesterday.
"To some extent this has begun with the use of RMB for trade settlement, which is growing quickly."