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26 May 2012| last updated at 02:05PM

Yen-yuan direct trading to start June



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TOKYO: Japan and China are expected to start direct trading of their currencies as early as June as part of efforts to boost bilateral trade and investment, reports said Saturday.

 

With the planned step, exchange rates between the yen and the yuan will be  determined by their transactions, departing from the current “cross rate”  system that involves the dollar in setting yen-yuan rates, Kyodo News said.
 
The two governments are eyeing setting up markets in Tokyo and Shanghai,  the Yomiuri Shimbun said.
 
The yen-yuan exchange system would help businesses in the world’s second-  and third-largest economies reduce risks associated with exchange rate  fluctuations in the dollar and cut transaction costs, Kyodo said.
 
It will be the first time that China has allowed a major currency except  the dollar to directly trade with the yuan, Kyodo said. -- AFP

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