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China and Japan to begin direct currency trading

AFP [1]
June 1, 2012

China and Japan will start direct currency trading on Friday asBeijing marks another stage on its journey to internationalise the yuan.

Forex traders will be able to swap Japanese yen for the Chinese unit without having to use the US dollar as an intermediary currency when markets open in Tokyo and Shanghai at 0000 GMT.

The yuan-yen trade — part of a wider deal reached last year between Beijing and Tokyo to forge closer ties — will be allowed to move in a wider range than the narrow band at which the dollar and yuan change hands.

China will set a daily rate based on dealer quotes, with trade allowed to move within a 3.0 percent band above or below that rate, compared with a 1.0 percent band fixed to the yuan-dollar.

Full article here [1]