The US dollar's reserve currency status is enduring a death by a thousand cuts.
Japan said on Tuesday it had received approval from China's government to purchase 65 billion yuan ($10.3 billion) in Chinese government debt in a move that can help Japan diversify its reserves away from the dollar and strengthen economic ties between the two Asian countries.
The timing of purchases hasn't been set yet as Japan still needs to make some administrative preparations, but Japan is likely to start with a small amount and then increase purchases, Japan's Finance Minister Jun Azumi said.
Japan will also consider the impact on financial markets when it decides the timing of its purchases, Azumi said.
China said on Monday it would continue its purchases of Japanese government debt but would reduce purchases when the yen is rising as China and Japan, holders of the largest and second-largest currency reserves, look to limit exposure to the dollar.
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