Singapore and China have agreed to introduce direct trading between their currencies under a new deal signed between the two countries, the Monetary Authority of Singapore said Tuesday.

As per the agreement, China will also extend its Renminbi Qualified Foreign Institutional Investor (RQFII) program to Singapore, helping the city-state to develop a full-fledged offshore yuan center.

The agreement for the new initiatives was reached at the Joint Council for Bilateral Cooperation, co-chaired by Singapore Deputy Prime Minister Teo Chee Hean and China's Vice Premier of the State Council Zhang Gaoli.

The new initiatives are expected to further promote the international use of the yuan.

The aggregate RQFII quota of CNY 50 billion ($8.2 billion) will allow qualified Singapore-based institutional investors to channel offshore yuan from Singapore into China's securities markets.

Singapore will be given consideration as one of the investment destinations under the new Renminbi Qualified Domestic Institutional Investor (RQDII) scheme. This will allow qualified Chinese institutional investors to use yuan to invest in Singapore's capital markets, the MAS said.

"Financial ties between the two countries have deepened considerably and Singapore is well placed to promote greater use of the RMB in international trade and investment in the years to come." MAS Managing Director Ravi Menon said.

RTTNews