The Australian dollar will become the third currency after the US dollar and Japan’s yen to be directly convertible with China’s renminbi, Prime Minister Julia Gillard said on Monday.
Gillard said in Shanghai that Beijing had appointed Australia’s ANZ Banking Group Ltd and WestpaC Banking Corp as market makers for the direct trading on the Chinese foreign exchange system.
Australian national broadcaster ABC quoted Gillard as saying that trading would start Wednesday.
“This is a huge advantage for Australia, not only for our big businesses but also for our small and medium enterprises that want to do business here,” Gillard said.
Currently, the Australian dollar has to be converted into US dollars or yen before being swapped for renminbi.
The currency deal, which will be formally announced Tuesday, benefits Australian companies by taking away exchange-rate risks and lowering transaction costs.
Since 2009 China has moved to internationalise its currency, with more than 10 per cent of its international trade conducted in renminbi — increasingly a rival to the US dollar as a store of value.