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China is also launching trading in contracts with the Malaysian ringgit and the New Zealand dollar from 29th December. China is promoting usage of the yuan in global commercial and financial transactions, with the ultimate goal of rivaling the dollar as a reserve currency.
Friday’s announcement will extend the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market.
Analysts say China will not halt its accelerated plans to internationalize its currency.
“This will provide companies with better hedging tools, and at the same time, make currency trading more efficient,” a Bloomberg report quoted HSBC’s strategist in Hong Kong, Ju Wang as saying.
“China won’t stop yuan globalization” despite volatility in emerging market currencies, the strategist said.
China is promoting the use of its currency as an alternative to the dollar in global trade and finance and more and more nations now want to capture the fast-growing market for offshore trade in yuan, also known as the renminbi.
The Chinese currency is already traded directly against the US dollar, the euro, the Japanese yen, the British pound, the Aussie and New Zealand dollars, Russia’s rouble, the Singapore dollar and Malaysia’s ringgit. Yuan settlement in trade surged from 2.06 trillion yuan in 2012 to 3.01 trillion yuan in 2013 worldwide.
Meanwhile, Russian President Vladimir Putin asked business leaders last week to report on plans to sell foreign currency revenues and to engage in responsible foreign exchange operations, Vedomosti newspaper reported earlier this week.
TBP and Agencies