China-Japan direct currency trading to boost economies
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E-mail Xinhua, May 29, 2012
The imminent launch of direct trading between the Chinese currency yuan and the Japanese yen is expected to considerably facilitate bilateral trade and investment and give fresh impetus to the world's second and third biggest economies.
The Central Bank of China on Tuesday announced the direct trading will kick off on Friday, both in Shanghai and Tokyo.
For years, the greenback has been the only major direct trading currency of the yuan, also known as the renminbi, and China's main foreign exchange reserves currency, continuously keeping yuan's dependence on the U.S. dollar.
The yen, after the dollar, will become the second major direct trading currency of the yuan.
China is Japan's largest trading partner, and bilateral trade reached as high as 300 billion U.S. dollars in 2010. About 60 percent of Japan-China trade is estimated to be conducted in dollar.
The direct trading will boost bilateral investment, as well as imports and exports due to more convenience in business and considerable reduction of risks caused by fluctuation of the dollar's exchange rates on the world market.
The trading also can encourage Japanese investors' purchase of Chinese financial products and better protect the interests of Chinese enterprises in the global supply chains.
It also serves as an energetic spur to the influence of the two currencies on the global market.
Moreover, the trading will save the two countries some 3 billion dollars of transaction fees annually, which are paid to the U.S. central bank in the dollar-involved China-Japan trade.
China and Japan had been holding talks on yuan-yen direct trading since Chinese Premier Wen Jiabao and Japanese Prime Minister Yoshihiko Noda agreed to promote bilateral financial cooperation at a meeting in December in Beijing.
Investors and economists from both countries had held high expectations on the direct trading even before Beijing and Tokyo announced the exact date for officially starting the business.
