Yuan-yen exchange gets an active start
By Feng Jianmin |
June 2, 2012, Saturday
|
Print Edition
Print Edition
THE Japanese yen strengthened against the yuan yesterday on the first session of direct trading between the two currencies in Shanghai and Tokyo.
Economists said the direct yuan-yen trading would reduce Asian countries' exposure to risks of the US dollar and euro, and would help the yuan to go international even as its appreciation slows down.
China's central bank yesterday morning set the central parity rate at 8.0686 yuan per 100 yen, or 12.3937 yen per yuan, based on prices quoted by several banks, including Mitsubishi UFJ Financial Group, Bank of China and HSBC Bank, which have been approved to handle trading of the currency.
The yuan, allowed to trade as much as 3 percent on either side of the set parity, closed at 8.1185 per 100 yen in Shanghai, according to the China Foreign Exchange Trade System.
In Japan, the yuan fetched 12.33 yen (or 8.11 yuan per 100 yen) in Tokyo's foreign exchange market at 9am, and was traded mostly at around 12.31 yen during the day, a Shanghai-based trader said. That compared to 12.37 yen when the market closed on Thursday.
Previously, the yuan/yen rate was calculated based on yuan/dollar rate and dollar/yen rate, and any settlement between yuan and yen would use the US dollar as an intermediary.
"Trading has been active," said Xu Ming, a Shanghai-based trader with the Bank of China. "The direct trading could increase yuan/yen liquidity and reduce costs for trading on the inter-bank foreign exchange market."
He added that the market-made prices would not dictate the yuan/yen exchange rate, but it would increase the transparency of China's exchange rate system.
The move has been widely welcomed as part of China's efforts to reduce reliance on the US dollar after accumulating US$3.3 trillion of foreign-exchange reserves. More significantly, it has also been considered a step forward to protect trade and investment among Asian countries from risks of the greenback.
China is the largest trade partner of both Japan and South Korea. Total trade between Japan and China was 27.5 trillion yen (US$350 billion) in 2011, and has increased 2.5 times since 2001, according to data from the Japanese finance ministry. The number of Japanese companies that have businesses in China grew 1.5 times to 22,307 in 2010 from 2001.
"The yuan is playing an important role in the economic cooperation among Asian countries," said Sun Lijian, a professor with Fudan University, "China, Japan and South Korea are the center of such cooperation, but the low maturity of the financial market is still a shortcoming."
He said forming an international currency in the region would greatly help hedge risks in the West, and China needs to improve its foreign exchange system and promote international settlement to become a regional currency.
Economists said the direct yuan-yen trading would reduce Asian countries' exposure to risks of the US dollar and euro, and would help the yuan to go international even as its appreciation slows down.
China's central bank yesterday morning set the central parity rate at 8.0686 yuan per 100 yen, or 12.3937 yen per yuan, based on prices quoted by several banks, including Mitsubishi UFJ Financial Group, Bank of China and HSBC Bank, which have been approved to handle trading of the currency.
The yuan, allowed to trade as much as 3 percent on either side of the set parity, closed at 8.1185 per 100 yen in Shanghai, according to the China Foreign Exchange Trade System.
In Japan, the yuan fetched 12.33 yen (or 8.11 yuan per 100 yen) in Tokyo's foreign exchange market at 9am, and was traded mostly at around 12.31 yen during the day, a Shanghai-based trader said. That compared to 12.37 yen when the market closed on Thursday.
Previously, the yuan/yen rate was calculated based on yuan/dollar rate and dollar/yen rate, and any settlement between yuan and yen would use the US dollar as an intermediary.
"Trading has been active," said Xu Ming, a Shanghai-based trader with the Bank of China. "The direct trading could increase yuan/yen liquidity and reduce costs for trading on the inter-bank foreign exchange market."
He added that the market-made prices would not dictate the yuan/yen exchange rate, but it would increase the transparency of China's exchange rate system.
The move has been widely welcomed as part of China's efforts to reduce reliance on the US dollar after accumulating US$3.3 trillion of foreign-exchange reserves. More significantly, it has also been considered a step forward to protect trade and investment among Asian countries from risks of the greenback.
China is the largest trade partner of both Japan and South Korea. Total trade between Japan and China was 27.5 trillion yen (US$350 billion) in 2011, and has increased 2.5 times since 2001, according to data from the Japanese finance ministry. The number of Japanese companies that have businesses in China grew 1.5 times to 22,307 in 2010 from 2001.
"The yuan is playing an important role in the economic cooperation among Asian countries," said Sun Lijian, a professor with Fudan University, "China, Japan and South Korea are the center of such cooperation, but the low maturity of the financial market is still a shortcoming."
He said forming an international currency in the region would greatly help hedge risks in the West, and China needs to improve its foreign exchange system and promote international settlement to become a regional currency.
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