China and Singapore doubled a currency swap agreement to 300 billion yuan (US$48.3 billion) after the city-state became the third offshore center for the yuan last month.

Under the new arrangement, the funds will be available to eligible financial institutions in Singapore and those operating in China for a period of three years, the central banks said in a statement yesterday. China was Singapore's third-largest trading partner after Malaysia and Europe in 2012.

The People's Bank of China gave the Industrial and Commercial Bank of China the right to clear yuan transactions in Singapore last month, joining Hong Kong and Taiwan.

London is also trying to arrange a currency swap with China as it seeks to become an offshore yuan center in Europe.

"The new bilateral currency swap arrangement reinforces the cooperation between PBOC and MAS (Monetary Authority of Singapore) to strengthen economic ties and foster financial stability," the statement said. The agreement will "enable both central banks to provide foreign currency liquidity to stabilize financial markets."

Chinese Premier Wen Jiabao pledged this week to expand cross-border use of the yuan and encourage foreign investment, as the government aims to increase the budget deficit by 50 percent in 2013 to spur economic growth. The new deal was signed on Thursday and will replace the previous arrangement dated July 23, 2010, the central banks said.

Dariusz Kowalczyk, a Hong Kong-based Credit Agricole CIB strategist, said: "We expect the swap line to help boost the offshore yuan market and advance the proceeds of yuan internationalization."