“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 said on Tuesday.
The move is a part of an agreement between the two countries in December, 2011 to promote direct trading without using the American currency.
“By conducting transactions without using the third country’s currency, it will bring merits of reducing transaction costs and lowering risks involved in settlements at financial institutions,” said Azumi.
The Japanese minister stressed that the deal “will contribute to improve convenience of the both countries’ currencies and reinvigorate the Tokyo market.”
The China Foreign Exchange Trade System also in a statement described the move as an “important step” in “strengthening cooperation between China and Japan in developing financial markets and mutually promoting direct trading between the two currencies based on market principle.”
It said that the People’s Bank of China will actively support the move.
The Chinese central bank earlier Tuesday fixed a rate of 7.9480 yuan for every 100 yen.
China became the world’s second-largest economy after overtaking Japan in 2010.