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China launches direct yuan & won trading

Reporter: Zhang Mengyuan 丨 CCTV.com

06-28-2016 00:48 BJT

Direct trading between the Chinese yuan and the South Korean won began Monday in the inter-bank foreign exchange market and the early response has been good. Trade firms doing business in China and South Korea welcomed the new transaction method, saying it would help them save on costs in their forex operations.

Fluctuations in the foreign exchange rate are always a concern of companies dealing in foreign trade. Direct trading between the yuan and won now can save some costs for traders in their forex operations.

"In the past we should first exchange the RMB to the US dollar, and then exchange it to South Korean won. There were exchange rate differences of two times in changing. It was a loss for the company. Now it's convenient to buy won in China. And we will consider settling in won in our future settlements to save some costs," said Li Haixia Qingdao Donghe Foundry Co. Ltd.

China is South Korea's biggest trading partner. It's expected that a large number of traders will use the won in their settlements after the direct trading was launched.

"For our branch, there will be over 20 percent of the clients starting or more frequently using the won in their settlements. About 300 billion won in settlements will be achieved, and at the same time the settlement of the RMB in trading with South Korea will also increase," said Jia Wei, president Qingdao branch, Hana Bank.

The Chinese Foreign Exchange Trading System is taking charge of the management of the currency trade. It releases the midpoint rate every day, while banks can fix their exchange rates with a 5-percent difference based on the midpoint.

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