China signs currency swap agreement with Hungary

The central banks of China and Hungary signed a currency swap agreement with a notional amount of 10 billion yuan ($1.63 billion) in Basel on Monday.

It will strengthen financial cooperation between the two countries and support bilateral trade and investment, said a statement from the People's Bank of China.

The agreement will expire in three years, but can be extended upon mutual consent.

China's central bank has signed bilateral currency swap agreements with four countries in 2013. The other three are Singapore, the United Kingdom and Brazil.

Since 2008, China has expanded the agreements to 20 countries and regions in the world, improving the internationalization of the yuan.

The two countries under the agreement can exchange equal amounts of foreign currency by mortgaging the home currency within a certain limit, which can be used to provide short-term liquidity to the commercial banks' branches in the other country.

Analysts said that the currency swap agreement will reduce volatility risks in the dollar exchange rate during bilateral trade, and extend the regional financial corporation worldwide.