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South Korea launches yuan/won trading
[SEOUL] Direct trading between the Chinese and South Korean currencies began on Monday, with traders and government officials in Seoul saying transactions were more active than expected.
The two Asian trade giants have pushed hard for the direct trading in Seoul, with China looking to boost international use of the yuan, while South Korea wants to be among the global hubs for increasing yuan-related business.
"It went smoothly all around," said a finance ministry official, who declined to be named.
"It's important for the market to secure a firm footing until commercial demand and supply grow sharply." South Korea hopes more South Korean companies trading with China will adopt use of the yuan or won for payments, instead of using the US dollar. Latest data shows only 1.2 per cent of trade deals between the two countries is settled in yuan.
South Korea ran a US$60 billion trade surplus with
China last year, suggesting that the yuan will be in short demand in the Seoul market.
The yuan started trading at 180.30 won and finished at 180.77 won, central bank data shows. The pair had until now been quoted as a calculated cross rate from each currency's value against the dollar.
Volume amounted to 5.395 billion yuan (US$877.29 million) during the six-hours of trading, central bank data showed. Dealers said that was a touch higher than they had expected, although banks designated as market-makers led the trading.
South Korea is the third country to host direct trading of the yuan against its own currency. Russia and Japan took the step earlier.