Pakistan's central bank has allowed the Chinese yuan to be used for bilateral trade and investment activities, ensuring that imports, exports and financing transactions can be denominated in the Chinese currency.

In a statement late Tuesday, the State Bank of Pakistan (SBP) stated that the Chinese yuan was an approved foreign currency for denominating foreign currency transactions in Pakistan, reports Xinhua news agency.

"SBP has already put in place the required regulatory framework which facilitates use of yuan in trade and investment transactions," the statement said.

In terms of regulations in Pakistan, the yuan is at par with other currencies such as US dollar, euro and the Japanese yen.

Indicating deepening economic ties between the two nations, the central bank said regarding recent local and global economic progress, specially an increase in trade and investment with Beijing under the China-Pakistan Economic Corridor (CPEC), it "foresees that yuan-denominated trade with China will increase significantly going forward; and will yield long term benefits for both the countries".

Last month during the launch of Long Term Plan for the CPEC 2017-30, Minister for Planning and Development Ahsan Iqbal said that the government was examining a proposal to use the yuan for trade between China and Pakistan.