ANZ, HSBC approved to trade China currency

New Zealand Prime Minister John Key, left, and Chinese Premier Li Keqiang exchange Chinese Yuan and New Zealand Dollar banknotes. Photo / AP

ANZ and HSBC say they have been approved by The People's Bank of China to act as market makers for direct trading between the New Zealand dollar and China's currency the renminbi.

Prime Minister John Key and China's Premier Li Keqiang last night announced an agreement to allow direct trading of the currencies.

Up until now businesses have had to convert either currency into US dollars first. ANZ and HSBC join Westpac Bank which was also named as a licensed market maker last night.

ANZ China CEO Dr Charles Li said direct trading between the two currencies had economic, trade and investment significance for both countries.

"...it will improve trade flows and reduce costs for companies doing business between New Zealand and China."

ANZ New Zealand managing director institutional, David Green, said China was now New Zealand's largest trading partner and a key market for many of the country's major industries such as dairy products, meat, seafood, wool and education.

"It's also a major source of migrants, students and tourists, so Chinese culture makes up an important part of the fabric of our community and enhances business connectivity with Asia."

Noel McNamara, CEO of HSBC New Zealand, said the currency agreement was another symbolic step in the China-New Zealand relationship following on the free trade agreement signed between the two countries in 2008.

"New Zealand corporates trading with China should incorporate renminbi into their plans to maximise their market opportunities," he said.

McNamara said around 12 per cent of China's total foreign trade was currently settled in RMB and HSBC expects this to rise to around 30 per cent by 2015.

Bilateral trade between New Zealand and China amounted to around $19 billion in the 12 months to January 2014.

Finance minister Bill English said the agreement would help build on the growing trade and investment ties between the two countries.

"Just as the free trade agreement between New Zealand and China has supported a significant increase in two-way trade between our countries, I expect this currency agreement to further deepen our economic relationship," English said.

Last year alone, trade in goods between New Zealand and China increased by more than 25 per cent to $18.2 billion - making China New Zealand's top destination for goods exports.

The New Zealand dollar is only the sixth currency to be traded directly with the renminbi, following the US dollar, the Japanese yen, the Australian dollar, the Russian rouble and the Malaysian ringgit.