China, S.Korea launch won-yuan market in Seoul

China, S.Korea launch won-yuan market in Seoul 

December 1, 2014, 5:37 am

China is promoting the use of its currency as an alternative to the dollar in global trade and finance [Xinhua]

In efforts to boost China-South Korea trade and increase the use of the yuan in Korea, the two countries on Monday launched an offshore trading hub in Seoul for China’s yuan currency.

The two currencies can now trade directly, cutting out the US dollar.

Monday’s establishment of the won-yuan market is expected to help reduce appreciation pressure for the Korean currency against the US dollar by curbing inflows.

“The won-yuan direct trading market is like a new start-up with high potential. We will nurture this start-up into a world-class competitive hidden champion,” South Korean Finance Minister Choi Kyung- hwan said in Seoul on Monday at the opening.

China is South Korea’s largest trading partner, with bilateral trade amounting to $230 billion in 2013.

China is promoting the use of its currency as an alternative to the dollar in global trade and finance and more and more nations now want to capture the fast-growing market for offshore trade in yuan, also known as the renminbi.

The Chinese currency is already traded directly against the US dollar, the euro, the Japanese yen, the British pound, the Aussie and New Zealand dollars, Russia’s rouble, the Singapore dollar and Malaysia’s ringgit. Yuan settlement in trade surging from 2.06 trillion yuan in 2012 to 3.01 trillion yuan in 2013 worldwide.

Earlier this year, South Korea won an 80 billion yuan ($12.9 billion) quota for domestic investors to buy securities in China under the Renminbi Qualified Foreign Institutional Investor program.

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