Yen-yuan direct trading to start Friday

Tokyo and Beijing will start direct trading of their currencies on Friday, Japan's Finance Minister Jun Azumi said on Tuesday, scrapping a system that sets yen-yuan rates via their US dollar values. The move is aimed at boosting trade and investment between the world's second- and third-largest economies. It is the first time China has allowed a major currency other than the greenback to trade directly with the yuan, Japanese media has reported. "From June 1, the yen-yuan exchange rate will be constantly indicated in both markets, facilitating full-fledged direct exchange trading," Azumi told a regular press briefing, according to Dow Jones Newswires. By not using the dollar as an intermediate currency "we can lower transaction costs and reduce settlement risks at financial institutions as well as making both nations' currencies more useful", he added. Trading under the new regime will start in Tokyo and Shanghai on June 1, Azumi said. China overtook Japan to become the world's second-largest economy in 2010, and the two are forging closer business ties despite frequent diplomatic squabbles including territorial rows.