Foreign Exchange News
- Govt. to increase forex purchase quota
Date: 8-Jan-2007 Sources: (Shenzhen Daily)
THE government will raise the yearly quota for purchases of foreign exchange by individuals to US$50,000 from US$20,000 starting Feb. 1, the country's foreign exchange regulator said late Friday.
China will also set the yearly quota for sales of foreign exchange by individuals at US$50,000, said the State Administration of Foreign Exchange (SAFE) in a statement. The measures are aimed at making it easier for individuals to carry out foreign-exchange transactions under the capital account, said the SAFE.
The steps also aim to make the government's controls over foreign-exchange flows more balanced, marking a change from the previous practice of easing foreign-exchange inflows and restricting outflows, said the SAFE.
They aim to foster equilibrium in the balance of payments and support overseas investments by individuals, as well as follow the principle of easing restrictions on individual transactions in the capital account, it said.
In a separate statement Friday, the SAFE said it will gradually ease the management of overseas investments by individuals in commodity futures and financial derivatives.
It will also gradually ease management of borrowing from abroad, and of lending to overseas parties.
Last year, China allowed banks and funds to offer offshore investment products to local clients under what is commonly called the Qualified Domestic Institutional Investor program.
Last week, the government said banks will be allowed to offer individuals a single foreign-exchange savings account, rather than a separate account for cash transactions and one for funds transferred to their accounts from overseas.
But banks will still be allowed to differentiate between both types of accounts and charge different rates for converting currencies in both account types, said the SAFE.
Last week, the People's Bank of China said the country will set a yearly quota for individuals to make foreign-exchange sales starting Feb. 1, instead of setting limits for each transaction.
But it didn't give the annual quota for forex settlements at the time, saying: 'We will adjust the yearly quota at a suitable time and in the appropriate magnitude.'
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