The central banks of China and Malaysia have signed a currency swap agreement, the Chinese government said, as Asia's second-largest economy strengthens regional ties amid the global crisis.

The People's Bank of China and Bank Negara Malaysia announced the three-year, 80-billion-yuan (US$11.7 billion) agreement on Sunday, the Chinese central bank said in a statement on its website.

"The arrangement aims to promote bilateral trade and investment to boost the economic development of the two countries," said the brief statement.

Easing liquidity trouble

Arrangements such as these ease liquidity trouble as they boost the amount of yuan that Malaysian banks can draw on while servicing local companies that use the Chinese currency when trading.

Last month, China and Hong Kong signed a 200-billion-yuan swap agreement with Hong Kong, as a follow-up on a pledge by Beijing to help the city through the global economic crisis.

In December, the central banks of South Korea and China agreed to expand a currency swap deal to the equivalent of 30 billion dollars from an existing four billion.

- AFP