China Starts Direct Trading with New Zealand
Premier Li Keqiang along with New Zealand Prime Minister John Key jointly announced the start of a new direct trading between New Zealand and Chinese currencies yesterday. The much awaited move to trade the two currencies means that the kiwi has joined the ranks of the Australian dollar, Japanese yen and US dollar as one of the four market making currencies that can be fully converted directly into the renminbi.
The People’s Bank of China will be announcing the reference rate for the currencies in Shanghai and will limited the moves of the yuan to 3 percent on either side. Furthermore the United Kingdom and Singapore announced several deals with China starting in October that will trade directly between their currencies and the yuan which has already overtaken the euro in becoming the second most used currency in the global trade finance. South Korea is also in the works to seek convertibility of its currency with the Chinese yuan,
Doing direct convertibility will make it easier to conduct businesses with China and will hekp stimulate investment and trade in participating countries. Direct trading will also increase the integration of New Zealand and the Chinese financial system and will further deepen economic relations between the two, as China has now become the top destination of exports of New Zealand.