China and Australia reach currency deal

  • The Australian dollar is now the third currency, along with the U.S. dollar and the Japanese yen, to be directly converted into the Chinese yuan.

    The move is seen as a major step in China's drive to internationalize its currency.

    Beijing is keen to push the yuan as an alternative to the U.S. dollar's role as a global reserve currency.

    China is the biggest buyer of Australia's natural resources such as iron ore.

    However, without a system to directly convert between the Australian dollar and the Chinese yuan, the two nations have been using the U.S. dollar as a trading currency.

    The new deal comes into effect today.

    According to economists, there is likely to be a rise in Australian and Chinese companies agreeing on prices in either currency.

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