Australian PM to sign currency conversion deal with China during visit

Australian Prime Minister Julia Gillard is expected to sign a currency deal with China to allow the Australian dollar to be converted directly to Chinese RMB, The Australian newspaper said in a front page report on Saturday.

The report identified no source of the information. If the report is proved true, Australia will become the third country after the United States and Japan to have a direct currency conversion deal with China.

China is Australia's largest trading partner with two-way trade totaling 126 billion U.S. dollars in 2012.

The report quoted former Australian ambassador to China Geoff Raby as saying that "The value of such a deal would be substantial for exporters to China, especially those that import a lot from China like mining companies, as it would remove business constraints including exchange-rate risks and transaction costs."

In its Australia in the Asian Century White Paper released in last October, the Australian government said "We have held preliminary discussions with the Chinese government to explore how soon direct convertibility can be practicably achieved. We are continuing these discussions, and also exploring other opportunities to work with China to support the internationalization of the RMB."