China and Japan to start direct yen-yuan trade

China will allow direct trading of the yuan and the Japanese yen from the next month, in a move aimed at promoting trade between Asia's two biggest economies.

This means the two countries will not be using the US dollar as an intermediary.

China, which sometimes has a tense relationship with Japan, is the country's biggest trading partner.

"This is part of China's broader strategy to reduce dependence on the dollar," said Dariusz Kowalczyk from Credit Agricole CIB in Hong Kong.

He added that the yen was chosen because of the large amount of trade between the two countries and that "this could lead to an expansion of trading with other currencies".