The People’s Bank of China has selected HSBC as one of the first banks to conduct the direct exchange of the yuan against the pound in Shanghai.
The central bank says the decision is expected to lower the costs of trading with the U.K. The pound will also become the fifth main currency to be directly traded against the renminbi, after the Japanese yen, the New Zealand dollar, the U.S. dollar and the Australian dollar, reported Bloomberg.
PBOC also officially confirmed yesterday that China Construction Bank will be the first bank to conduct yuan’s clearing in London. The agreement, alongside with other trade deals, will be signed today in the present of China’s Prime Minister Li Keqiang who is currently on a state visit to Britain.
Starting Thursday, HSBC will play the role of market maker for the GBP/RMB. HSBC currently converts directly the Japanese yen, New Zealand dollar and Australian dollar into the yuan, a trade it conducts in six continents.
“Direct trading between RMB and GBP is a significant step forward in the internationalisation of the Chinese currency that will further enhance the use of RMB in the UK. In the process, it will facilitate the rising trade and investment flows between the two countries by simplifying foreign exchange transactions and reducing transactional costs,” Helen Wong, the China-based deputy chairman, president and chief executive officer of HSBC Bank said in a press release.
In a separate report, JP Morgan’s head of forex spot trading for CEEMEA Paul Davenport has moved to Nomura as the head of emerging markets foreign exchange trading for EMEA, where he is replacing Bernard Singer who left for Citi. Davenport’s former boss at JP Morgan was Stephen Jefferies, the head of forex for EMEA and emerging markets, reported FX Week. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at firstname.lastname@example.org