(Corrects to clarify this is the first time China has granted quota to the U.S. Removes erronous reference to existing quota for U.S. firms in paragraph 5)
BEIJING, June 7 (Reuters) - China will grant the United States a 250 billion yuan ($38 billion) quota under its Renminbi Qualified Foreign Institutional Investor (RQFII) programme, a central bank vice governor said on Tuesday.
Yi Gang made the announcement at the Strategic and Economic Dialogue talks in Beijing, without providing further details such as the timeframe.
Launched in 2011, the RQFII programme allows financial institutions to use offshore yuan to buy securities in mainland China, including stocks, bonds and money market investments.
The new quota will significantly expand the RQFII program, which stood at 501.77 billion yuan at the end of May.
The quota is the first granted to the U.S. under the programme. Hong Kong has the largest RQFII quota at 270 billion yuan.
Chinese regulators have been pushing to expand foreign investors' access to domestic financial markets to both make the markets broader and more sophisticated and to attract more capital inflows.
But foreign interest has waned after a near-meltdown in China's equity markets last year and subsequent heavy-handed official intervention to shore stock markets back up.
The central bank said in February it would allow all kinds of financial institutions that are registered outside China to buy bonds in the interbank market and would scrap quotas for medium- and long-term investors.
The RQFII is also part of China's effort to expand use of the yuan internationally, which received a setback last August after it suddenly devalued the currency.
Yi said on Tuesday that internationalisation of the currency will be market-oriented.
U.S. Treasury Secretary Jack Lew said on Sunday that it was critical for China to continue moving toward a more market-oriented exchange rate. nB9N11S01Z
Some analysts believe that U.S. support for the expanded use of the yuan will serve to keep China on track to deliver on pledges of currency and other reforms.
"In our view, the U.S.'s rising interest in RMB internationalization is an incentive for the Chinese authorities to stay on the path of financial and FX reforms," HSBC said in a recent research note.
($1 = 6.5712 Chinese yuan renminbi) (Reporting by Kevin Yao; Editing by Kim Coghill)