The Australian dollar has become the third currency, along with the US dollar and the Japanese yen, to trade directly with the Chinese yuan.
The move is seen as a significant step in China’s push for a more international role for its currency.
Beijing is trying to promote the yuan as an alternative to the US dollar’s role as a global reserve currency.
“The yuan is on its way to becoming fully convertible,” said Stuart Oakley, managing director at Nomura.
“This ties in with a trend that we have been observing for a some time. And being fully convertible is a pre-condition to becoming a reserve currency.”