(Yicai Global) May 3 -- China and Japan plan to renew a currency swap agreement to reopen bilateral currency exchanges in case of financial crises and other emergencies, reported Japan’s Nihon Keizai Shimbun, better known as Nikkei, today.
China and Japan are expected to reach a consensus on speeding up specific consultation on a new currency swap agreement aimed at strengthening bilateral cooperation in the finance sector during Chinese Premier Li Keqiang’s visit to Japan on May 9, the Nikkei report said.
The Bank of Japan and the People’s Bank of China will initiate a specific negotiation mechanism following the deal, according to Nikkei. Premier Li will have talks with Japanese Prime Minister Shinzo Abe in Tokyo, and both sides regard the expected deal as a symbolic measure to improve bilateral relations, it added.
China and Japan signed a currency swap agreement in 2002, which expired in 2013, but was not renewed due to diplomatic problems including the Diaoyu Islands issue.
Under the planned agreement, it will be possible to directly procure the yuan from the Bank of Japan during a financial crisis. Weakening concerns about the liquidity of the Chinese currency will encourage Japanese institutional investors to purchase the yuan-denominated securities.
During next week’s Li-Abe summit, China and Japan are also expected to reach a consensus on establishing a framework for Japanese financial institutions to invest in Chinese stocks and bonds and improving the yuan settlements in the Japanese market, Nikkei said.
Editor: Mevlut Katik