BOC becomes yuan-yen direct trading market maker

The Bank of China (BOC), China's third-largest lender, announced Thursday that it has been approved as one of the country's first market makers in yuan-yen direct trading, which is set to start Friday.

The BOC said in a statement that it will comply with its duties, quote both the buy and sell prices of the yuan against the Japanese currency on the interbank foreign exchange market and provide liquidity for the market.

The BOC's announcement came after HSBC Bank (China) Co., Ltd. said Wednesday that it was approved as a market maker in yuan-yen direct trading on China's interbank market.

Mizuho Corporate Bank (China) Ltd., a subsidiary of the Japan-based Mizuho Corporate Bank, has also been granted the status, the Shanghai-based China Business News reported Thursday.

China on Tuesday announced that direct trading of the yuan against the yen will begin on Friday, marking the first time for China to allow a major currency other than the U.S. dollar to be traded directly against the Chinese currency.

Starting from Friday, the central parity rate of the yuan against the yen will be based on the average price of offers made by market makers before the opening of the market each business day.

As part of China's efforts to promote Sino-Japanese financial cooperation, the move is also viewed as a further step toward the yuan becoming a truly global currency.