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Bank warns New Zealand businesses to prepare for RMB trade

(Xinhua)

15:54, January 12, 2012

WELLINGTON, Jan. 12 (Xinhua) -- New Zealand importers and exporters need to step up preparations to trade in Chinese currency as China's central bank makes it easier to clear Renminbi (RMB) across borders, a major international bank said Thursday.

Recent announcements by the People's Bank of China (PBOC) that it was upgrading China's National Advanced Payment System marked another move towards RMB's internationalization and indicated more traders would demand payment in RMB rather than U.S. dollars, according to the HSBC.

Cath Henry, head of global payments and cash management at HSBC New Zealand, said it was one of the strongest indications in a while that China was forging ahead with plans to internationalize the RMB.

"New Zealand importers and exporters need to ensure they are geared up for making and receiving international payments using RMB, as we are likely to see more and more trade partners demanding payments in RMB as 2012 progresses," said Henry in a statement.

"In fact, it appears that there is a surprisingly high level of buy-in for the internationalization of the RMB in China, with critics of the process very much in the minority.

"Even with negative developments in the global and domestic macroeconomic environment, there appears to be minimal risk of a roll back of the internationalization of the RMB. However, this could slow, rather than halt, if the Eurozone situation got much worse," she said.

This was despite fading expectations for the RMB's appreciation, which ended last year at 4.7 percent, slightly below traders' expectations of 5 percent, she said.

Daniel Brdanovic, head of institutional sales - global markets at HSBC New Zealand, said the relative stability of the RMB was behind its widening acceptance.

"We still expect the RMB to appreciate in 2012, albeit at a slower pace of around 3 percent," said Brdanovic in the statement.

"We believe the RMB will be a favored Asian currency to hold in 2012, and even if we expect it to be more volatile, it should be relatively less volatile than other currencies in the region."

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