China and Singapore have agreed to trade their currencies directly, making the Southeast Asian city - state another offshore hub for Chinese yuan.

Singapore will become one of several locations where Chinese institutional investors will be able to buy foreign securities with yuan. The limit for currency trades by financial institutions in Singapore that invest in China's domestic securities was stipulated at 50 billion yuan ($8.2 billion), according to the Renminbi Qualified Domestic Institutional Investor program.

"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 in the statement. RMB stands for renminbi, which is the official name of the Chinese currency.

Tuesday's move follows last week decision by the UK to ease rules for Chinese banks willing to set up in London, which was coupled with Beijing's decision to open up its markets to British-based investors.

In another move to promote the yuan globally the country agreed on a currency swap with the EU earlier in the month. The swap facility that could total as much as 350 billion yuan and �45 billion and will last for three years marked one of the largest currency deals between China and a non-Asian trading partner.