SHANGHAIâ€"Japan and China will start direct trading of their currencies on Friday, Japan's finance minister said Tuesday, as part of a broad agreement reached last year to reinforce bilateral financial ties.
"From June 1, the yen-yuan exchange rate will be constantly indicated in both markets, facilitating full-fledged direct exchange trading," Jun Azumi said at a press conference following a Cabinet meeting.
The move could help strengthen the financial cooperation of the two countries and lower companies' foreign-exchange fees, the People's Bank of China said in a separate statement Tuesday.
Mr. Azumi added that by not using the dollar as an intermediate currency in exchanging the two Asian currencies, "we can lower transaction costs and reduce settlement risks at financial institutions as well as making both nations' currencies more useful and energizing the Tokyo market."
China's central bank has invited banks to make the market onshore for the soon-to-be-launched direct trading, people familiar with the situation told Dow Jones Newswires Tuesday.
The daily yen-yuan central parity rate will be given by the weighted average of prices given by market makers from Friday, said the China Foreign Exchange Trade System, the trading arm of the PBOC. The PBOC now sets only the dollar-yuan central parity based on market makers' quotes and translates it into the fixings for other major currencies.
The PBOC earlier Tuesday fixed the central parity at 7.9480 yuan for every ¥100.
â€"Wynne Wang, Wang Ming and Takashi Nakamichi
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