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China began trading the Malaysian ringgit against the Chinese yuan on the domestic foreign exchange market Thursday in the latest step towards making the yuan an international currency.
The People's Bank of China, the nation's central bank, set a central parity rate, to be published daily before trading starts, of 0.46204 ringgit per yuan, according to the website of the China Foreign Exchange Trading Centre (CFETC).
The yuan is allowed to move a maximum of five percent up or down against the ringgit from the central parity rate.
The band is wider than the 0.5 percent range set for the yuan and the dollar, and the three percent band for four other major currencies currently traded on the onshore market.
The move is aimed to "promote bilateral trade between China and Malaysia and facilitate using the yuan to settle cross-border trade", the CFETC said in a statement late Wednesday.
Beijing has been taking steps including promoting the use of the yuan to settle international trade and forging currency swap agreements in a bid to make the yuan a major global currency.
The central bank said earlier this week it would allow foreign financial institutions that participate in the yuan settlement program to invest their yuan proceeds in China's interbank bond market, giving those receiving yuan as payments an investment channel.
