TORONTO (Reuters) - A deal to set up Toronto as North America’s first trading hub for China’s yuan currency will save Canadian companies up to C$6.2 billion ($5.5 billion) over the next decade and boost trade and growth, Toronto-Dominion Bank (TD.TO) said on Wednesday.
Canada’s agreement with China to host the hub will allow direct exchange and trade operations between the Canadian dollar and yuan. This will bypass the need to settle transactions through an intermediate currency, reducing costs and foreign exchange risks.
TD analyst Diarra Sourang said in a report that the arrangement will likely mean an increase in Canadian exports to China, and especially benefit small and medium-sized companies trying to expand into the world’s second largest economy.
The TD report noted there have been forecasts that the deal could boost exports by up to C$32 billion over the next 10 years. It said financial institutions and Canada’s Pacific Coast province of British Columbia, which already has commercial ties with China, will likely be big beneficiaries.
Reporting by Solarina Ho; Editing by Jeffrey Hodgson; and Peter Galloway