China will launchdirect trading of yuan with seven more currencies on its inter-bank foreign exchange market from next week, according to the country's foreign exchange trade system.
The seven currencies are Swedish krona, Hungarian forint, Danish krone, Polish zloty, Mexican peso, Turkish lira and Norwegian krone, said China Foreign Exchange Trade System (CFETS).
The move will bring the number of foreign currencies that are allowed direct trading with the yuan to 23, state-run 'Xinhua' news agency reported late last night.
The CFETS currently announces every business day the central parity rates of the yuan against major currencies including the US dollar, euro and Japanese yen.
The direct trading will help lower exchange costs and facilitate bilateral trade and investment, the CFETS said.
To promote the global use of the yuan and open up financial markets, China has stepped up the signing of direct trading agreements with new currencies.
In his press conference today, Zhou also played down
concerns over China's world's largest forex reserves declining saying that there should not overreaction in this regard.
The dropping trend in China's foreign exchange reserve is a normal phenomenon, he said adding that, "China does not want that much forex reserve."
He said the forex reserve had seen fast expansion since 2002, which China deems to be unnecessary.
In the meantime, China sees no need in its policymaking to overreact to the large stockpile, Zhou said.
Since the global financial crisis, capital flow from developed countries implementing monetary easing policies to emerging markets had surged significantly, Zhou said.
The capital influx lacks stability and may flow back with the recovery of those developed economies, he added.
China still holds the largest forex reserve stockpile in the world, much higher than the runner-up, the governor said.
China's outstanding forex reserve stood at a little more than USD 3 trillion by the end of last month, down from near USD 4 trillion in 2014, according to official data.
