Yuan starts direct trading with NZ dollar
Beijing will start direct trading between the yuan and the New Zealand dollar today as the world's second-largest economy promotes greater use of its currency in global trade and finance.
The move would help reduce foreign-exchange transaction costs for commerce between the two countries, the People's Bank of China said on its website yesterday. The announcement coincided with a visit to Beijing by New Zealand Prime Minister John Key.
The yuan is now the second-most widely used currency in 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 in Hong Kong. "It will also contribute to lower transaction costs for companies since there's no need to go through two currency pairs but one."
Two-way trade between New Zealand and China surged 29 per cent to NZ$18.86 billion (HK$125.3 billion) in the 12 months to January, government data showed, with China overtaking Australia to become New Zealand's largest trading partner.
Chinese demand for New Zealand's exports helped drive the kiwi up 17 per cent against the US dollar over the past three years, the strongest gain among 16 major currencies. It reached 86.06 US cents last Thursday, the highest level since April.
New Zealand's merchandise exports to China jumped to NZ$9.97 billion last year, more than doubling since 2010 and accounting for about 20 per cent of its overseas shipments, according to Statistics New Zealand.