BoCom to allow conversion of Aussie dollar into renminbi

Conversion to begin in 2014 as part of the renminbi’s internationalization.

Bank of Communications is among seven Chinese and two Australian banks licensed by the People's Bank of China, the central bank, to act as market makers for direct trading of the currencies. It already offers the service in China.

The two countries agreed last month to allow each other's currencies to be directly converted, making Australia only the third country to have such an arrangement with China.

The currency agreement does away with the need for companies and currency traders to first convert their Australian dollars or renminbi into US dollars, cutting down on transaction costs.

China's fifth-largest bank by assets hopes the agreement will encourage more business and cross-border investments between the two countries. China is Australia's biggest trade partner, buying vast quantities of raw materials such as iron ore and coal to help fuel its steel mills and power plants. About a fourth of Australia's exports go to China.

BoCom hopes to triple its Australian assets to about $3 billion by the end of 2014, singling out Australia as a priority in its global expansion. It is increasing syndicated lending and trade finance for Chinese companies investing in the energy and agriculture sectors.