SYDNEY - Australian businesses and travelers will benefit from a new agreement that allows Australian dollar to be converted directly into renminbi, local media reported Monday.

Under a new agreement between China and Australia, the two currencies can be directly traded through approved channels from Wednesday, according to the Australian Associated Press.

The move will cut transaction costs and should ultimately result in a better exchange rate for tourists and businesses, OzForex chief currency strategist Jim Vrondas said.

He said the savings to businesses could be higher than 1 percent of a transaction value.

Australia's ANZ Banking Group and Westpac will be the two licensed banks to make the market for the currency in China, the Australian Broadcasting Corporation reported.

The Westpac Chief Executive Officer Gail Kelly said the deal simplifies trade and investment between the two nations.

The Australian Chamber of Commerce and Industry, or ACCI, said the direct convertibility between the Australian dollar and the Chinese renminbi will enhance trade between the two countries.

"Making it easier to do business often involves a myriad of small steps, of which today's announcement is just one, but an important and welcome one," said ACCI Chief Executive Officer Peter Anderson in a statement.