Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ dollar-yuan trade may jump, following Australian example

NZ dollar-yuan trading may jump, following Australian example, HSBC says

By Tina Morrison

March 19 (BusinessDesk) – New Zealand can expect exponential growth in foreign exchange trading with China after the two countries agreed to direct trading of their currencies, according to HSBC Bank, which will be involved in trading the currency pair.

The agreement means the New Zealand dollar can now be directly converted to the Chinese yuan, instead of having to use the US dollar, the world’s most-traded currency, as an intermediary. When Australia made a similar agreement with China last April, its currency trading with the yuan surged from US$300 million in March to US$2.5 billion in January, HSBC said.

“We can’t ascertain what that number is going to look like in New Zealand but what we do know is it will take a similar track. It does grow quite dramatically,” said Gerard Field, head of global markets at HSBC New Zealand. “I would expect the same track. This will just be exponential.”

For New Zealand, the currency deal reflects a strengthening relationship with China, which is now our largest trading partner following a 2008 Free Trade Agreement and is a major source of migrants, students and tourists. The kiwi is the sixth currency China has approved for direct trading as it seeks to raise the global usage of its currency. The yuan in October overtook the euro to become the second-most widely used currency in global trade finance, behind the US dollar.

The agreement “will make cross border flows that much easier into the future,” said HSBC’s Field. “You get direct convertibility, you get more liquidity, you get more flow in the currencies, so by doing that it makes it easier to transact in those currencies.”

The New Zealand dollar rose as high as 5.3495 yuan, an 11-month high and recently traded at 5.3373 yuan.

New Zealand commodity exports of dairy, meat, fish and logs are being underpinned by China as Asia’s largest economy grows at a 7.5 percent annual pace, boosting incomes and spurring demand.

“In the future the importance of China just continues to grow to New Zealand,” Field said. “This really opens up the trade flows. We are delivering the soft commodities and the high quality goods that China wants. We are well placed to grow off the back of China’s growth.”

HSBC, ANZ Bank and Westpac Banking Corp. are among banks to receive approval from China’s central bank to act as market makers for the currency pair.

The direct trade of the currencies is expected to cut down on transaction costs, with each transaction of $100,000 having the potential to save several hundred dollars, Westpac said.

China has previously agreed direct trading with the US dollar, the Japanese yen, the Australian dollar, the Russian rouble and the Malaysian ringgit.

In a move aimed at allowing market forces a greater role in determining its exchange rate, China this week doubled the yuan’s trading band against the US dollar to 2 percent on either side of a daily reference rate set by the central bank.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half Empty: Fonterra's 2017 Opening Forecast Below Expectations

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected as the world's largest dairy exporter predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. More>>

ALSO:

Pest Control: Mouse Blitz Team Leaves For Antipodes

The Million Dollar Mouse project to rid Antipodes Island of mice is underway with the departure of a rodent eradication team to the remote nature reserve and World Heritage Area. More>>

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Fulton Hogan's Heroes: Managing Director Nick Miller Resigns

Fulton Hogan managing director Nick Miller will leave the privately owned construction company after seven years in charge. The Dunedin-based company has kicked off a search for a replacement, and Miller will stay on at the helm until March next year, or until a successor has been appointed and a transition period completed. More>>

ALSO:

Gordon Campbell: On Electricity, Executions, And Bob Dylan

The Electricity Authority has unveiled the final version of its pricing plan for electricity transmission. This will change the way transmission prices (which comprise about 10% of the average power bill) are computed, and will add hundreds of dollars a year to power bills for many ordinary consumers. More>>

ALSO:

Half Empty: Fonterra NZ, Australia Milk Collection Drops In Season

Fonterra Cooperative Group says milk collection is down in New Zealand and Australia, its two largest markets, in the first 11 months of the season during a period of weak dairy prices. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news