Exporters have welcomed signs the Federal Government is preparing to lobby for rights to have Australia directly convert its currency into yuan, following the lead of the United States and Japan.
The developments come as the yuan – also called the renminbi (RMB) – hit its highest point in a month yesterday, underlining the growing importance of the Chinese currency in domestic business.
“At the end of the day, we would definitely support having that opportunity,” Australian Institute of Export executive director Ian Murray told SmartCompany this morning.
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According to The Australian Financial Review, the government is preparing to back calls for Australia to be allowed to directly convert its currency. Treasurer Wayne Swan will reportedly take the case to a conference in Hong Kong this week.
Last month, China allowed Japan to directly convert its currency. Previously, it had only allowed direct conversion to the US dollar. But with China wanting to move away from the US dollar as a reserve currency, it’s also looking to broaden its foreign exchange rules.
Australia is one of a few countries lobbying for the rights. If the move is approved, Australian companies would no longer have to convert funds into US dollars or through the Japanese yen.
Exporters have welcomed the news. “It all works towards this idea of being internationally competitive, And, from our perspective, any advantage we can get is a good one,” Murray says.
More domestic businesses are starting to trade in China, or at least deal in Chinese currency. And although Murray says many of these businesses are at the higher end, there are still opportunities for SMEs.
“Any advantage we can get is good, and to put it another way, no one would like to see us be disadvantaged if other countries can get ahead.”
“It’s like free trade agreements. And I think, these days, the word that’s high on everyone’s agenda is competitiveness. If we can be more competitive than someone else, then that’s good.”
Swan told AFR he would be speaking with the Chinese government about the internationalisation of the yuan.
“That is why we’ve been taking action to promote and deepen the market in RMB/AUD transactions,” he said.
“I’ll be building further on these efforts by co-hosting a forum on RMB internationalisation in Hong Kong next week which will bring together key private sector parties and policy-makers and help promote and broaden this market.”