Currency deal agreed between UK and China

<p>A three-year currency deal has been confirmed between China and the UK.</p>

China and the UK have announced they have confirmed a new three-year currency deal.

The Bank of England and the People's Bank of China have signed a three-year currency swap arrangement as the UK seeks to become a centre for the yen.

It is believed that the total value of the currency swap deal is worth 200 billion yuan (£21 billion).

Outgoing Bank of England governor Sir Mervyn King first announced the deal was set to take place in February. He is soon to be replaced in the role by current Bank of Canada leader Mark Carney.

"In the unlikely event that a generalised shortage of offshore renminbi liquidity emerges, the Bank will have the capability to facilitate renminbi liquidity to eligible institutions in the UK," Sir Mervyn said on Saturday.

The currency deal is the first time China has come to such an agreement with a fellow G8 nation.

Earlier in the month (June 16th), the dollar slipped by 0.7 per cent against the yen and this left the Dollar Index at its lowest point for four months.

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