Japan, China to begin direct currency trading

TOKYO - China will start direct trading of its currency against the Japanese yen on Friday, the country's central bank said Tuesday.

It marks the first time for China to allow a major currency other than the US dollar to trade directly with RMB, or the yuan.

The move, part of the efforts between China and Japan to strengthen cooperation in developing the financial market, serves as an important means of promoting direct yuan-yen trading, the People's Bank of China said in a statement on its website.

The new trade regimen will start on China's interbank foreign exchange market on June 1, according to the China Foreign Exchange Trade System, the market operator.

Taking the greenback as an intermediate currency, the yuan can be traded against eight other currencies on the market, including the euro, British pound, Hong Kong dollar, Japanese yen, Malaysian ringgit, Russian ruble, Australian dollar and Canadian dollar.

As China overtook Japan as the world's second-largest economy in 2010, the move is expected to boost trade between the two leading economies, analysts said.