The average daily trading volume of the won-yuan trading market here has exceeded $2 billion over the past year as it has successfully taken root to help bolster South Korea-China economic ties, data showed Tuesday.

The daily turnover reached an average $2.26 billion as of end-November, compared with a daily $880 million recorded in December last year, the first month of the launch of the market, according to data compiled by the Bank of Korea. In November, the figure hit $3.63 billion.

The daily trading volume for the year was 26.4 percent of the won-U.S. dollar trading over the past 12 months.

In bilateral trade between South Korea and China, yuan payments reached $930 million in September, up from $240 million a year earlier.

Trade payments in the Chinese yuan took up 3 percent of the total Korea-China trade in the third quarter of this year, up from 1 percent in the first quarter of last year, with the rest paid in U.S. dollars.

China is South Korea's largest trade partner, with trade volume reaching $250 billion in 2014.

Following an agreement between South Korean President Park Geun-hye and her Chinese counterpart, Xi Jinping, Seoul launched the direct trading market on Dec. 1 last year to reduce exchange costs between the two currencies.

Authorities chose 12 banks, including five foreign bank branches, as "market makers," who are tasked with proposing selling and buying prices. Earlier this year, they eliminated the bank tax on yuan debts and partially reduced other levies depending on the lenders' won-yuan trading volume in a bid to vitalize the market.

The BOK expected the turnover in yuan trading to be on a sharp rise in the near future as the Chinese yuan was added to the International Monetary Fund's special basket of currencies.

"Financial institutions will develop more diversified yuan instruments like investment tools or currency hedge funds to give wider chances to market players," said the BOK in a release. "South Korea's Finance Ministry and the BOK will make steady efforts to strengthen the convenience and stability of the won-yuan spot trading market to lead its quality growth."

The Ministry of Strategy and Finance said the won-yuan direct exchange rate will be applied to the market from next year, instead of the indirect current arbitrage rate pegged to the U.S. dollar.

"Starting from next year, the basic rate for exchange in the won-yuan direct market will go with the market average exchange rate, instead of the arbitrage rate," said Choi Hee-nam, deputy minister for international affairs at the ministry.

Since its launch, market players deal the currencies in accordance with the won-yuan rate indirectly calculated from won-dollar and yuan-dollar rates due to slim trading volume in the beginning.

In South Korea, all currency trading except for the U.S. greenback is subject to arbitrage exchange rates based on the won-dollar ratio.

He said the won-yuan exchange market has grown large enough to adopt the direct market exchange rate starting next year.

A senior Chinese banker said the won-yuan market will likely grow further down the road on the back of growing bilateral trade.

"Trade between South Korea and China will likely expand further on the back of the recently signed free trade agreement, and the won-yuan spot market will get a boost from it," said Shen Rujun, executive vice president of China's Bank of Communications, which is serving as a clearing bank for the direct won-yuan trading in Seoul.

"We've set up infrastructure during the past one year. Now we have to put more efforts to develop various yuan-denominated instruments to attract more players and provide liquidity in the market." (Yonhap)