Bank of China Lets US Customers Trade Yuan

Wednesday, 12 Jan 2011 11:58 PM

 

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State-owned Bank of China Ltd. has opened trading in the yuan currency to U.S. customers, according to a posting on the bank's website dated December 2010.

The move, seen as a strong endorsement of foreign trading in the yuan, or renminbi, comes ahead of a scheduled visit to Washington by Chinese President Hu Jintao next week. The visit may again spotlight China's exchange rate policies.

The website for the Chinese bank's New York branch said it now lets companies and individuals buy and sell the yuan through accounts with its U.S. branches, although U.S. businesses and individuals can also trade the currency through Western banks.

Buying and selling in the yuan had been largely confined within China until mid-2010. Trading in the Chinese currency, however, swelled in Hong Kong since China opened trading in the yuan last July.

"China internationalizing the yuan is all part of slowly giving up the firm grip and control of its trading, which is necessary to ease the capital controls and reform the foreign exchange channels," said David Watt, senior currency strategist at RBC Capital Markets in Toronto.

"Every step has been a small step. It is with small steps to a more flexible currency, but at their pace and what they are comfortable with. It is also not a shock that the Chinese did this just when they are meeting with U.S. officials," he added.

China has a pattern of making significant announcements or policy changes ahead of big international meetings with its public officials. Ahead of the G20 meeting in Toronto last year, they loosened the yuan's peg against the dollar.

U.S. President Barack Obama hosts his Chinese counterpart, Hu Jintao, for a summit on Jan. 19 that is being billed as the most important state visit in 30 years amid concerns about stability on the Korean peninsula and simmering tensions over a ballooning trade gap.

The bank's website, which outlines details of holding renminbi accounts, said the bank offers yuan savings, demand deposit and time deposit accounts to business customers in New York and Los Angeles.

A savings account requires a minimum balance of the equivalent of $5,000, while the minimum in demand deposit accounts is $3,000.

© 2014 Thomson/Reuters. All rights reserved.

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