|
By Fion Li Jun 18, 2014 6:47 AM ET
 Photographer: Chris Ratcliffe/Bloomberg
China's Premier Li Keqiang, left, and U.K.
Chancellor of the Exchequer George Osborne,... Read More
China will allow the yuan to be exchanged directly for British pounds
from tomorrow in Shanghai as the world’s second-largest economy promotes
the use of its currency in global trade and finance.
“This is an important step in strengthening
bilateral economic and trade connections between China and the United
Kingdom,” the People’s Bank of China said in a statement on its website.
The move will help lower foreign-exchange transaction costs between the two
nations, it added.
The pound will become the fifth major currency to
trade directly against the yuan in Shanghai, joining the Australian and New
Zealand dollars, the Japanese yen and the U.S. dollar. China’s currency ranked seventh for global
payments in April, according to the Society for Worldwide Interbank
Financial Telecommunications, and the U.K. trailed both Hong Kong and Singapore in handling these
transactions. Plans were announced in October to make the Singapore dollar
convertible into yuan.
“Having the direct quote for pound-yuan trading
improves transparency for the end user and helps lay the foundation for the
use of the yuan as a new global currency,” Beng Hong Lee, the
Shanghai-based head of markets for China at Deutsche Bank AG, said in an
e-mail today. “We expect that the introduction of yuan clearing in London
will have a significant accelerating effect on the use of the yuan in
London.”
 Photographer: Stefan Rousseau/AFP/Getty Images
British Prime Minister David Cameron, right, and
Chinese Premier Li Keqiang leave... Read More
Trade Goal
Chinese Premier Li Keqiang is visiting the U.K. and yesterday outlined
a goal of expanding commerce between the two countries to $100 billion by
the end of next year. Trade deals valued at 14 billion pounds ($24 billion)
were signed during the trip, according to British Prime Minister David Cameron.
The introduction of the new currency pair comes eight months after plans for such a
move were first announced. Trading will start from tomorrow, according to a
statement on China Foreign Exchange Trade System’s website.
The PBOC announces a daily reference rate for the yuan against the British pound at
around 9:15 a.m. in Shanghai on each trading day, even prior to the start
of the direct trading. The rate was set at 10.4413 per pound today, compared
with 10.4439 yesterday, according to the China Foreign Exchange Trade
System.
Direct trading means the fixing will be computed
without involving a cross rate with the U.S. dollar. HSBC Holdings Plc was
selected by the PBOC to be among the first batch of market makers for the
direct trading of the Chinese and British currencies, it said in a
statement today.
Clearing Bank
The PBOC today appointed China Construction Bank Co., the nation’s
second-largest lender, as London’s first yuan clearing bank. Together with
the direct linkage of yuan and pound, that will add weight to London’s bid
to be Europe’s offshore yuan hub amid competition from Frankfurt, Paris and
Luxembourg.
Singapore announced plans to start direct trading
between its currency and the yuan in October, a week after that of the U.K.
was put forward. South Korea is making preparations for a direct link of
the won and the yuan, aiming to start it within this year, Reuters reported
today, citing Choi Hee-nam, head of the finance ministry’s international
finance bureau.
The Bank of England “is committed to further supporting the
cross-border use of the RMB in a manner that is consistent with our
domestic responsibilities,” Governor Mark Carney said in a statement today, referring to renminbi, the official name of the Chinese currency.
‘Extraordinary Expansion’
“Connecting British firms and markets to China’s
extraordinary expansion is a key part of our economic plan, because it
brings jobs and investment to our country,” George Osborne, Chancellor of the Exchequer, said in a statement
today. “I welcome today’s appointment as another major step forward for the
U.K. as the western hub of Chinese finance.”~
The yuan slipped 0.07 percent to close at 6.2314
per dollar in Shanghai today. The Chinese currency has dropped 2.8 percent
against the dollar this year, the worst performance in Asia, according to
data compiled by Bloomberg.
“We expect more yuan internationalization and
liberalization measures to be steadily rolled out,” said Paul Mackel, the Hong Kong-based head of Asian currency
research at HSBC. “But renminbi internationalization does not equal
appreciation. This year has demonstrated that these are separate stories
for the renminbi.”
|
No comments:
Post a Comment