Australia optimistic about yuan trading

An Australian senior trade commissioner and a banker said Thursday that they were optimistic about the prospect of direct trading between the yuan and the Australian dollar and that Australia should do more to promote yuan use by Australian companies.

"These are very early days and a number of companies have formed contracts that they were already committed. Some companies operate in industries where the global convention is that trade is denominated in US dollars," Alan Morrell, Beijing-based Senior Trade Commissioner of the Australian Trade Commission, told reporters at an award ceremony in Beijing.

"But I'm optimistic that many people in governments and businesses see the logic and sense of having direct trading between the two currencies," Morrell said.

China and Australia signed an agreement in April to allow the Australian dollar to trade directly with the yuan, making it the third currency to do so following the US dollar and the Japanese yen.

Andrew Whitford, head of Greater China at Westpac Banking Corporation, one of Australia's Big Four banks, also said at the ceremony that the yuan and Australian dollar conversion market had been very active over the 30 trading days to the end of April.

Whitford did not provide the exact figure for such conversion transactions but assured reporters that there had been a lot of interest in direct convertibility between the currencies.

Given the large trade volume between the nations, Australia should be doing more to support yuan settlement, he said.

China has been Australia's largest trade partner for years, with bilateral trade in goods reaching $122.2 billion in 2012.

The Australian comments came in response to early media reports that some multi­national firms are not interested in using the yuan to settle trade because they are not yet convinced it will reduce the cost of transactions with Chinese customers.

"If companies are reluctant to use the yuan to settle trade it is probably because they have a lot of investments outside China," Zhao Xijun, deputy dean of the School of Finance at Renmin University of China, told the Global Times.

"With the current capital control in China, holding yuan will be inconvenient for them," Zhao said.

"To promote global acceptance of the yuan, China should open up its capital account to allow freer capital flow. But that can only be done after China has good market supervision in place," noted Tan Yaling, head of the China Forex Investment Research Institute.

At a regular meeting of the State Council, the country's cabinet, on Monday, Premier Li Ke­qiang pledged to come up with an operational plan to allow full convertibility of the yuan under the capital account within the year.