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People's Daily Online>>China Business

Yuan takes another global step

By Feng Jianmin (Shanghai Daily)

09:21, November 29, 2011

The yuan started trading against the Australian dollar and Canadian dollar in China's foreign exchange market yesterday, a move observers said may accelerate the Chinese currency's internationalization by promoting its use in cross-border trading.

Banks can now trade the two currencies against the yuan directly unlike previously when they had to first convert them into the US dollar before being changed into the yuan.

Australia and Canada are both major producers of the commodities that have powered China's rapid economic growth, and economists said direct trading may cut risks in exchange rate fluctuations and help stabilize commodity prices and smooth trading procedures.

"China has large demand for resources and is sensitive to commodity price (movements)," said Charlie Cheng, senior vice president of the investment banking division of CMB International Capital. "It is necessary to allow direct trading in these two currencies."

But the yuan was thinly traded against the two currencies yesterday, Chang Wenjuan, a trader with the Bank of China, said.

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