China tightens forex rules to curb inflation
China approved new rules to curb illegal inflows of capital, underscoring government concern that money from investors attracted by the yuan’s gains.
By Bloomberg |
LONDON: China approved new rules to curb illegal inflows of capital, underscoring government concern that money from investors attracted by the yuan���s gains and decade-high interest rates will stoke inflation. The rules increase the authority of regulators to check currency payments, the State Council, the country���s cabinet, said in a statement. It includes related transaction documents and bank-account information. The changes, the first since 1997, also simplify approvals of outbound investments and ease capital raising by foreign companies.
The government wants to prevent the appreciating yuan and interest rates at their highest since 1998 from stoking investment flows and fueling inflation in the world���s fourth-biggest economy.
A record trade surplus and investors seeking to profit from the strength of the yuan have flooded China���s economy with cash, swelling currency reserves to $1.8 trillion. The commerce ministry is pressing for slower yuan gains to protect exporters after the currency���s 6.7% advance against the dollar this year, after its 6.9% gain in 2007.
Traders of forward yuan contracts have pared bets on the speed of the yuan���s gain over the next year.
The government wants to prevent the appreciating yuan and interest rates at their highest since 1998 from stoking investment flows and fueling inflation in the world���s fourth-biggest economy.
A record trade surplus and investors seeking to profit from the strength of the yuan have flooded China���s economy with cash, swelling currency reserves to $1.8 trillion. The commerce ministry is pressing for slower yuan gains to protect exporters after the currency���s 6.7% advance against the dollar this year, after its 6.9% gain in 2007.
Traders of forward yuan contracts have pared bets on the speed of the yuan���s gain over the next year.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
