Sydney to be next offshore yuan trading center

Sydney is set to become the next offshore yuan trading hub and is likely to obtain a yuan clearing bank later in November, Reuters reported Monday.

China will sign an agreement with Australia to establish a yuan trading center in Sydney and the People's Bank of China (PBOC) is highly likely to appoint a yuan clearing bank in Sydney from China's five largest State-owned banks as early as the end of the month, Reuters reported quoting an unidentified insider.

The PBC did not respond to the Global Times' request for comment by press time.

It is not surprising that Sydney is on track to become the next offshore yuan trading center as bilateral trade and investment have grown rapidly in recent years, Yin Zhongli, a researcher at the Chinese Academy of Social Sciences, told the Global Times on Monday.

Monthly trading volumes between China and Australia have increased more than 14 percent in the past two years to $11.9 billion in September this year, according to customs data.

By setting up a clearing bank, China could promote direct trading of the two currencies, which will reduce the transaction costs for Chinese and Australian firms, Yin said.

As China's firms move up the industry value chain and attain a greater ability to decide on prices and the mode of transaction in bilateral trade, there will be more firms that will choose to use the yuan instead of US dollars in bilateral trade, Zhou Hao, an economist at Australia and New Zealand Banking Group, told the Global Times on Monday.

Separately, according to a statement released by the PBC on Monday, China and Qatar have signed a currency swap agreement worth 35 billion yuan ($5.72 billion).