Analysts hail yuan-euro direct trading announcement

Analysts have given the thumbs up to the Chinese central bank’s announcement on Monday that the Chinese currency can now be traded directly against the euro in its interbank currency market.

This would be a major boost to trade between China and the Eurozone, says Nordea. China stepped up plans to increase the international use of its currency last October with an agreement between the European Central Bank and the PBOC to swap euros and yuan.

“From today, the USD is no longer needed for trading between CNY and EUR. The two currencies can be traded direct against each other. This would lower transaction cost in EURCNY trading and push for yuan internationalization,’ said Amy Yuan Zhuang, senior Asia analyst at Noredea Research.

The yuan is now the second most-used currency in international trade after the US dollar.

“Implications for European companies are beneficial in terms of lower transaction costs in exchange and trading. Generally it will increase convenience in trade and investment between China and the Euro area. Implications for China are more important. It is a cornerstone in CNY internationalisation and it becoming a global reserve currency,” said Zhuang in an emailed statement.

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KevinKohler said:

And there we have it.


THIS is the war we will be waging against China. The military will be a thing of the past...all the violence in the world will be economic.


I WILL say...this will HAVE to cause the yuan to rise in value, in spite of China's best effort, theriby lessening the distance between it and the dollar, which might reduce off shoring.

Pretty soon, though...we're going to have to start making do with our potential trading partners on THIS side of the atlantic. Hello, South America.

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DaveFagan said:

It will rise in value only if the FOREX markets are not manipulated. The USDollar has risen in value about 7-8% in the last month, while US economic fundamentals have been in the sewer. If anything, the value should have dropped at least 7-8% in line with our economic indicators. All big money markets are manipulated. The PPT (Plunge Protection Team) is a US Treasury group designed to intervene in plunging markets, or to plunge markets, or to cause markets to rise and all done with large trading blocks. Most recently "naked short sales" of paper gold futures were used to manipulate down the price of gold. Currently the US is attempting to drive down the value of the Russian ruble and Oil, petroproducts are Russian lifelines. Of course, it is having the negative effect of killing US exports, but what a small price to pay to poke a stick in Putin's eye, eh? Or not!!

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KevinKohler said:

What effect could we have in russian petro products, when, ultimately, China ought to be their biggest trading partner in this field?

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DaveFagan said:

When the dollar goes up, the price of oil goes down. Oil is Russia's major export product/income generator.

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