China and New Zealand announced a landmark deal on Tuesday that allows the direct trading of the two countries' currencies.

The deal, which takes effect on Wednesday, ends the need for companies and currency traders to convert Chinese yuan or New Zealand dollars into a third currency, usually US dollars, when making or receiving payments.

The move will cut the costs of conversion while boosting cooperation in trade and finance, Premier Li Keqiang said during a meeting with New Zealand's Prime Minister John Key.