Fiji traders can trade directly in Chinese Yuan ANZ sets trend, now BSP to follow suit By Robert Matau Fiji companies trading with China stand to benefit immensely from the ANZ Bank’s Renminbi Trading Platform. Launched recently in Suva, the platform now means Fiji traders won’t have to convert their cash into US dollars and then convert it again into Chinese currency—termed as double conversion. They can now convert their Fiji dollars directly into Chinese currency. And so as Chinese traders who can also convert their Chinese currency into Fiji dollars. ANZ becomes the first bank in the Pacific to provide its corporate and commercial customers the ability to trade directly in Renminbi or Chinese Yuan when doing business in China. Bank South Pacific is also looking at offering the same service in the very near future. Reserve Bank of Fiji Governor Barry Whiteside said the launch of the RMB currency exchange is timely and a step in the right direction for Fiji. “ANZ Bank’s new facility will enable trade and investment between Fiji and China to be directly settled in RMB,” he said. “I have been informed that in this first phase of the rollout, customers will be able to negotiate Spot FX rates and Forward rates for hedging purposes. “I also note that over the next six months ANZ will introduce further RMB-denominated products such as trade finance instruments (including Letters of Credit) and RMB deposit accounts.” Whiteside said the RMB trading platform would allow local businesses an opportunity to negotiate improved commercial terms as Chinese suppliers who currently invoice in US dollars will no longer need to build in a FX margin. “Both Fiji businesses and consumers should benefit from the removal of the extra conversion costs associated with denominating transactions in US dollars. “Secondly, Fiji businesses can now access a wider pool of mainland suppliers as we will now have the flexibility to pay in their local currency. “The third possible benefit is that Chinese investors into Fiji can now convert RMB directly into Fiji dollars. The new initiative will also assist the government and statutory corporations that have RMB denominated loans to make repayments in a more straight forward and cost effective way without first converting to US dollars. Fiji’s exchange rate is pegged to its five major trading partners’ currencies. Even though China is now one of the top five trading partner countries, its currency is still not part of Fiji exchange rate basket as almost all trade with China is currently denominated in US Dollars. “However, with the introduction of this trading platform and likely increased trade settlement using RMB, there is the strong possibility of the Chinese currency being part of the Fiji dollar basket in the not too distant future," White said. Whiteside said China’s economy is the second largest in the world and also that China surpassed the United States last year to become the world’s biggest trading nation, with total annual flows reaching US$3.9 trillion. “In this regard, the RMB is clearly expected to play a greater role in international economic and financial activities. “Since 2009, the Government of the People’s Republic of China and its central bank have been progressively deregulating and internationalising the country’s currency.” The liberalisation of the RMB presented business opportunities and had seen a surge in RMB offshore deposits, RMB bonds issuance and trade payments through Hong Kong, the premier offshore RMB business centre. “More than 10 percent of China’s cross-border trade is now settled in RMB with over 70 countries already doing business in the currency,” he said. Trade with China has increased almost ten-fold from F$35 million in 2000 to over F$300 million in 2012.
Posted on: Wed, 03 Jul 2013 22:38:21 +0000
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