From the AFR:
China’s central bank governor has indicated a long planned currency deal with Australia is set to go ahead, as it would provide greater stability to the growing trade relationship.
The head of the People’s Bank of China, Zhou Xiaochuan, said direct trading of the yuan and Australian dollar was a “natural outcome”, given the scale of the economic relationship.
“We need to have direct trading between the two currencies,” he said in response to a question fromThe Australian Financial Review.
It would make Australia only the third country to agree on such a deal with China, after Japan and the United States.
The Australia dollar is at present exchanged with the yuan via the US dollar.
But the Chinese unit has begun to rival the US dollar as a regional trading currency and any deal would make it easier for Australian companies to settle trade using the yuan.
In a rare press conference, Mr Zhou said exchanging the yuan and Australian dollar through a third currency, usually the US dollar, sometimes proved unstable.
