The first batch of foreign central banks, sovereign wealth funds and international financial institutions have been registered to enter China's interbank foreign exchange market, the country's central bank said on Wednesday.
This registration comes ahead of a highly-anticipated announcement by the International Monetary Fund on Monday that China's yuan may join its foreign exchange basket.
That would place the yuan on par with the U.S. dollar , Japanese yen, British pound and euro in the exclusive Special Drawing Rights (SDR) basket.
The seven institutions that have been registered include three central banks: Hong Kong Monetary Authority, Reserve Bank of Australia, and National Bank of Hungary, the People's Bank of China said in a statement on its website.
The International Bank for Reconstruction and Development, International Development Association, Trust Funds of World Bank Group, and Government of Singapore Investment Corp, are the other four institutions to be admitted to the domestic market.
The PBOC said that the institutions would now be allowed to trade spot products, forwards, swaps, currency swaps and options in the country's domestic foreign exchange market.
China issued detailed rules on letting foreigners participate in the interbank foreign exchange market in September, following on from the PBOC's decision in July to permit long-term foreign investors trade in the interbank market and remove limits on the size of investments.
Granting foreign investors greater access to its capital markets is a long-running theme in China's quest to reform its economy and turn it into one more reliant on free markets, and less dependent on central planning.