China and NZ launch direct currency trading

Prime Minister John Key and China’s Premier, Li Keqiang, today announced the launch of direct trading of the New Zealand dollar against the Chinese renminbi in the Chinese onshore market.

Mr Key is in Beijing on the first day of his official visit to China, and met Premier Li Keqiang at the Great Hall of the People.

“It’s great to have been in Beijing to witness the conclusion of negotiations to launch direct trading of the New Zealand and Chinese currencies, which I kicked off during talks with President Xi on the margins of the Bo’ao Forum in April 2013.

“I am delighted that the project has been brought to a successful conclusion so quickly. It highlights the strong relationship and goodwill between New Zealand and China,” says Mr Key.

Mr Key says this important step will make doing business with China easier by reducing the costs of converting between the two currencies, and will stimulate trade and investment. 

“Direct trading will also increase the integration between the New Zealand and Chinese financial systems, and deepen the economic relationship between the two countries.  During 2013, trade in goods between China and New Zealand was worth $18.2bn, up 25.2% on the previous year.  China is now New Zealand’s top destination for exports of goods,” says Mr Key.

The New Zealand dollar is only the sixth currency to be directly traded with the renminbi. The other currencies are the US dollar, Japanese yen, Australian dollar, Russian rouble and Malaysian ringgit.  Previously, organisations that needed to trade the New Zealand dollar against the renminbi had to do so indirectly with two trades against a third currency, usually the US dollar. 

The Prime Minister says the New Zealand government continues to work with New Zealand banks, other financial institutions, and exporters and importers who trade with China, to raise awareness of the benefits of pricing in the two currencies and how direct trading can help.

“Today’s announcement will further reduce the costs of trade and investment transactions between New Zealand and China, increasing the ease of doing business for the benefit of businesspeople in both countries,” says Mr Key.