China and New Zealand signed a currency swap agreement worth 25 billion yuan ($3.8 billion) today, according to a statement posted on the People's Bank of China's website.
The agreement will last three years and is open to extension, the statement said. The aim is to help boost bilateral trade and investment as well as strengthen financial cooperation, the PBOC said.
China is seeking to promote greater use of the yuan in global trade and finance to reduce reliance on the U.S. dollar, which has weakened against all 16 major currencies since 2008, according to
The facility gives the Reserve Bank the capacity to borrow RMB when financial market disruption makes it difficult for businesses to access RMB to settle transactions with Chinese businesses.
"While there is no need to use the facility right now, it is useful to have this capacity if markets were ever to become dysfunctional. In addition the signing of this swap line contributes to building the China-New Zealand relationship," Reserve Bank deputy governor Grant Spencer said,