Japan and China will start direct currency trading this week,Tokyo said today,the first time Beijing has let a major unit other than the dollar swap with the yuan.
The move,which will scrap the greenback as an intermediary unit,comes as China introduces measures as part of a long-term goal of internationalising its currency to rival the dollar.
The two-way trade will also be allowed to move in a wider range than the narrow band at which the dollar and yuan change hands,Dow Jones Newswires and the Nikkei business daily reported.
China will set a daily rate based on dealer quotes with trade allowed to move within a 3.0 per cent band above or below that rate,the reports said,compared with a 1.0 per cent band fixed to yuan-dollar trading.
The Chinese central bank earlier today introduced a rate of 7.9480 yuan for every 100 yen,Dow Jones said.
However,there will be no fixed rates in Tokyo trade with the currencies trading freely,according to the same media reports which provided no further details.
The yen does trade freely against other major currencies on global foreign-exchange markets,including the greenback,with the dollar buying 79.50 yen in Asian afternoon trade today.
“From June 1,the yen-yuan exchange rate will be constantly indicated in both markets,facilitating full-fledged direct exchange trading,” Japan’s Finance Minister Jun Azumi told a regular press briefing.
By not using the dollar as an intermediate currency “we can lower transaction costs and reduce settlement risks at financial institutions as well as making both nations’ currencies more useful”,he added.
The announcement comes as China introduces measures as part of a long-term goal of internationalising the yuan to rival the dollar as the world’s benchmark currency.