China Adds Aussie, Canadian Dollar to its Limited Forex Trading
By Erik Pineda | November 29, 2011 1:13 PM EST
China has accelerated the 'internalization' of its controversial Yuan as Beijing decided on Monday to pit the currency against the Australian and Canadian dollars, a move seen by foreign exchange experts as the country's gradual ploy of making the money more acceptable for international trade.
The latest development, experts said, brings the Yuan against a total of nine international currencies, with the US dollar, euro, British pound, Hong Kong dollar, Japanese yen, Malaysian ringgit and Russian ruble also facing off with the local currency at the state-run China Foreign Exchange Trade System.
According to Agence France Presse (AFP), Beijing's new Yuan policy has so far attracted insignificant attention from international traders, with one foreign bank dealer telling the news agency on Monday that "was only one deal for both of the two."
By the end of Monday's trading session, the AFP source revealed that both the Australian and Canadian currencies soared against the Yuan on the first of the 'controlled' float.
Its movement so far, international observers said, is still in line with Beijing's apparent goal of letting the Yuan to either gain or lose an average of 0.5 percent when pitted against the American currency.
China's currency policy has come under intense criticisms from the United States government, with U.S. officials regularly criticizing Beijing of manipulating the Yuan in order to gain undue advantage over other export products hitting the international market.
At present, China is regarded as the world's premier factory, with most of global products being assembled in Chinese provinces and then shipped to various countries around the world.
Among the country's chief customers are giant companies such as Apple, Hewlett-Packard and other tech firms, who prefer Chinese for their efficiency and affordability.
The set-up, however, has resulted to a huge trade deficit between America and China, prompting many U.S. lawmakers to call for a review on trade policy with Beijing and the likelihood of imposing measures to correct the imbalance.
China has repeatedly rejected suggestions that it is not playing fair and cautioned U.S. officials that any sanctions against its trade policies would only lead to more serious issues that could rattle the international trade conditions.
Gradually, however, Beijing has implemented measures that would allow the limited floating of its currency, which analysts said was in fact a policy to further advance the Yuan an alternative global currency in the future rather that appeasing its critics, mainly the United States.
Yuan-based bonds have so far attracted the attention of some American firms, according to AFP, which include McDonald's and Caterpillar, both of which have issued Yuan-dominated bonds in Hong Kong.
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