×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: china | dollar | yuan | foreign exchange

Few People Seen Selling Yuan for Dollars on First Day of China's Forex Quota Re-set

Few People Seen Selling Yuan for Dollars on First Day of China's Forex Quota Re-set

Tuesday, 03 January 2017 08:38 AM EST

China's authorities have sounded the alarm in recent weeks over the risk of capital outflows from the economy, but there was little evidence at Beijing and Shanghai banks on Tuesday that Chinese individuals were rushing to lock in 2017 quotas to buy foreign exchange.

Only a trickle of people at banks were seen selling yuan for dollars on the first business day of the new year, when buyers in theory could have made use of their quotas.

Under China's capital controls, individuals are permitted to buy up to $50,000 in foreign exchange a year, and data shows January is typically a standout month for onshore foreign currency deposits.

The yuan shed nearly 7 percent against the dollar last year, its poorest showing since 1994, as policymakers struggled to contain capital outflows and preserve foreign exchange reserves in the face of a slowing economy and resurgent dollar.

Authorities have tightened monitoring of foreign exchange transactions out of concern over capital outflows.

China's currency regulator this week began requiring Chinese individuals who want to buy foreign currencies to specify the purpose of the purchase and provide additional information, and said it would monitor transactions more closely and frequently as well as punish rule-breakers.

At major bank branches in two of China's biggest cities, there were no queues on Tuesday, and the few individuals who changed money reported doing so with relative ease.

 

SMOOTH AND QUICK

"The whole process of changing money was pretty smooth and quick," said an office worker surnamed Xu, who withdrew $500 from an ICBC branch in Beijing on Tuesday for a coming vacation in the United States.

Several other customers at banks in the two cities reported similar ease when changing amounts of money well below the quota.

However, it is unclear how much foreign currency exchange was being conducted online on Tuesday. Central bank data shows onshore foreign exchange deposits rose by almost 32 percent in the first 11 months of 2016, propelled in part by the yuan's fall to eight-year lows.

Aside from the rising forex deposits, there has been little indication of growing unease among ordinary Chinese - although the authorities were taking no chances, repeating a mantra that the economy is improving and there is no basis for depreciation of the yuan in the long term.

Yang Zhao, chief China economist at Nomura in Hong Kong, said there wasn't any widespread panic about the falling yuan, so he had not expected a surge in demand.

In recent months, analysts have noted that the yuan was not alone in falling against the dollar, with most other emerging market currencies also suffering, which has helped keep sentiment around the yuan from souring too much.

Zhao said restrictions on use of foreign exchange limited anyone's options and so acted as a disincentive anyhow.

"You can't buy real estate. You can't purchase anything. Basically you can only park that FX in your deposit account onshore with interest rates that are very low," he said.

© 2022 Thomson/Reuters. All rights reserved.


Markets
China's authorities have sounded the alarm in recent weeks over the risk of capital outflows from the economy, but there was little evidence at Beijing and Shanghai banks on Tuesday that Chinese individuals were rushing to lock in 2017 quotas to buy foreign exchange.Only a...
china, dollar, yuan, foreign exchange
496
2017-38-03
Tuesday, 03 January 2017 08:38 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved