15 Aug 2011

BNZ joins rush to renminbi

6:26 am on 15 August 2011

Another domestic bank is to offer accounts for New Zealand companies to deal directly with Chinese companies in their own currency.

BNZ says it will be in a position to offer settlement accounts in the official currency of the People's Republic of China, the renminbi (RMB), to clients within the next two months.

The Chinese government the middle of last year loosened restrictions for the first time on which countries could conduct trade in the renminbi.

HSBC was first out of the blocks in New Zealand, settling a renminbi transaction for Swandri-maker Longbeach Holdings last August.

The ANZ and BNZ have also completed transactions.

BNZ working capital services head Brett Walters says trading in renminbi reduces hassle for Chinese importers who previously needed US dollars to buy from New Zealand companies.

He says dealing directly in renminbi won't save New Zealand companies selling to China from a weakening US dollar.

Mr Walters says the United States is the international currency of settlement, so all transactions go through that in some shape or other.

Currently, BNZ can exchange renminbi with a Chinese bank on behalf of its clients, but it cannot hold the currency in accounts in New Zealand.

Mr Walters says the bank expects to open accounts for local clients within the next couple of months.

He says if renminbi can be held in an account, it will be possible to hedge by deferring converting the money if the exchange rate being offered at the time does not suit.

HSBC predicts the renminbi could be in the top three currencies for trade settlement globally within the next six months.

The other two major Australian banks operating in New Zealand - ASB and Westpac - are still to get in on the renminbi market.