Trading in China’s currency, the renminbi, and Swiss francs, officially opened 9 November

Trading in China’s currency, the renminbi, and Swiss francs, officially opened 9 November, says the Swiss National Bank in a press release issued Tuesday afternoon:

“The People’s Bank of China (PBC), the Chinese central bank, has authorized direct trading between renminbi and Swiss francs on the China Foreign Exchange Trade System (CFETS) with effect from 9 November 2015. The availability of a direct renminbi/Swiss franc exchange rate will help to reduce currency conversion costs for market participants. This will facilitate and promote the use of renminbi in cross-border transactions between companies and financial institutions. Direct trading between the currencies of China and Switzerland is an important step in strengthening bilateral financial and trading relations, and in establishing a renminbi hub in Switzerland. Prerequisites for the establishment of a renminbi hub in Switzerland are the renminbi swap agreement between the Swiss National Bank and the PBC, signed in July 2014, and the Memorandum of Understanding between the two central banks on further progress in China-Switzerland cooperation, signed in January 2015.”

Bloomberg reports that the move makes “the franc the seventh major currency that can bypass a conversion into the U.S. dollar and be directly exchanged for yuan. The rate will be allowed to fluctuate a maximum 5 percent on either side of a daily fixing, according to CFETS.”

The Financial Times reports today that “HSBC is to become a market-maker for trading the renminbi and the Swiss franc in the country’s interbank foreign exchange market. The bank, a long-standing advocate of the internationalization of the renminbi, is the only overseas bank that trades all the renminbi’s existing available currency pairs.”