China's central bank recently released a rule permitting companies in select cities to settle cross-border trades using the yuan, as part of efforts to reduce reliance on the US dollar for international trade. Banks will be able to offer yuan settlement services from now on, PBOC said in a statement on its website. It said tax authorities were working on the specific regulations for rebates.

The central government approved the use of the yuan to settle cross-border trade with Hong Kong on June 29. The first transactions will start this month, according to Hong Kong Monetary Authority Chief Executive Joseph Yam, who signed a supplementary agreement with central bank Governor Zhou Xiaochuan the same day.

The move, it claimed in the statement, would likely reduce companies' exposure to foreign exchange risks, increase liquidity in foreign trade and cut transaction costs.