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Published 11 July 2012 14:22, Updated 12 July 2012 04:15
Tour de France cyclists, such as this year’s favourite Bradley Wiggins, are paid their winnings in euros but in ANZ Bank is to be believed the European unit may one day cede its place as the world’s second currency to China’s yuan. Photo: Reuters
The winner of this year’s Tour de France will take home a hefty €450,000 euros, but if ANZ Bank is on the money the victor may want to be paid in yuan.
Speaking in Hong Kong, Australia and New Zealand Banking Group’s head of institutional and international banking Alex Thursby says that the liberalisation of the yuan will happen faster than expected, leading it to eventually replace the euro as the world’s second currency.
“The euro is losing its gloss as a second currency and I think the RMB will eventually fill that role,” The Australian Financial Review reports Thursby as saying.
The banker’s comments come amid expectations that Australia will become the third country allowed to directly convert its currency into yuan.
Such a move would lower transaction costs for Australian miners and importers, although the AFR reported earlier this week that Aussie businesses are in two minds about the prospects of trading directly in yuan.
But RBC Capital Markets chief currency strategist Sue Trinh suggests that direct trading could support the Aussie dollar in the longer term, depending on a number of external factors.
“The lower transaction costs [from direct Australian dollar-yuan trading], all else being equal, would suggest that easier trade might help boost linkages between the two countries but you also have broader issues of global demand coming off as well,” Trinh told the AFR last Friday.
“But if there’s less demand in China for instance, and no one wants any of Australia’s goods, it doesn’t matter how low transaction costs are. No one is going to be buying Australian stuff.”