Australia is seeking to deepen trading between the local dollar and the yuan as demand for commodities drives exports to China to record highs.
The yuan’s internationalization “is clearly in the interests of Australian businesses and the broader Australian economy,” Treasurer Wayne Swan, who will co-host a forum on the matter in Hong Kong next week, said today in a statement e-mailed from his office in Canberra. “Both governments are very keen to see us deepen and broaden this important market.”
China remained Australia’s top trading partner in May, with transactions climbing to A$11.1 billion ($11.4 billion), the most since October, according to figures released today by the Canberra-based statistics bureau. Japan last month started to use its currency in direct trading with China.
The so-called Aussie dollar, the world’s fifth-most traded currency, bought $1.0257 as of 12:20 p.m. in Sydney from $1.0276 yesterday. It has climbed 46 percent against the greenback since the start of 2009, the most among more than 150 currencies tracked by Bloomberg. The Australian dollar surged as demand from China and India for the nation’s resources set off a record mining boom.
The People’s Bank of China didn’t immediately respond to faxed questions seeking comment.
The central banks of China and Australia signed a A$30 billion ($31 billion) currency swap agreement to ensure the availability of capital between the trading partners, the Reserve Bank of Australia said in March.
“I would see these developments as natural given the fact that China is an increasingly large importer of commodities,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “Australia is a very much up there in terms of being a key supplier of commodities to China.”
Exports to China climbed to A$7.3 billion in May, the statistics bureau report showed. That’s the most ever in data compiled by Bloomberg dating back to 1988.
China’s imports from the South Pacific nation were the sixth-biggest among its trade partners in the 12 months ended May 31, averaging $7.3 billion a month, according to data compiled by Bloomberg. Japan, South Korea and the U.S. comprised the top three countries, the data showed.
“Australia stands a very good chance, given its two-way trade with China,” said Richard Grace, Sydney-based chief currency strategist and head of international economics at Commonwealth Bank of Australia, in reference to a possible direct trading agreement.
“It will help the exchange-rate implications become just a little more transparent,” Grace said. “Participants would be able to monitor the Aussie-yuan cross with a little more certainty. For the purposes of exporters and importers, it may reduce the level of complexity somewhat.”
The announcement of a currency swap deal between the RBA and the PBOC in March followed the decision by Chinese authorities in November to allow convertibility between the Aussie and yuan in the interbank market in China, Australia’s central bank said.
China will promote convertibility of the yuan capital account this year and expand investment channels for its foreign-exchange reserves, Yi Gang, head of the nation’s State Administration of Foreign Exchange, wrote in a report last month.