BEIJING, March 18 -- China's central bank announced on Tuesday it has approved direct trading between China's currency, the yuan, and the New Zealand Dollar (NZD).

The start of direct transactions between the two currencies marks a significant step forward in economic and trade relations between China and New Zealand, said the People's Bank of China, the country's central bank.

It also said the move will boost the use of the two currencies in bilateral trade and investment and be conducive to enhancing bilateral financial cooperation.

The China Foreign Exchange Trading System said that upon authorization from the central bank, direct trading between the yuan and NZD will be launched on the inter-bank foreign exchange market starting on Wednesday.