China adopts new measures to combat hot money inflow
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Building of the State Administration of Foreign Exchange. [CFP] |
The State Administration of Foreign Exchange (SAFE), China's foreign exchange regulator, said Wednesday it will take new measures to curb the inflow of speculative foreign capital, known as hot money, by limiting the dollar positions of domestic banks and reducing the short-term foreign debt quotas of domestic financial institutions.
The measures, which begin April 1, are the latest effort to cut the foreign capital inflow and ensure China's economic and financial security, SAFE said in a statement on its website.
"The measures are obviously targeting the hot money inflow," said Zhao Qingming, a senior analyst at China Construction Bank. "China is still facing a lot of pressure from the international balance of payments."
The Central bank data issued on March 2 showed China's financial institutions bought a net 501.65 billion yuan worth of foreign funds in January, approaching a new high since April 2008, which is alarming to foreign exchange market regulators.
The yuan is a major factor that affects the inflow of hot money betting on the appreciation of the currency. It closed at 6.5586 per dollar as of March 30, nearing its highest level since China's foreign exchange rate reform in 1994, according to the China Foreign Exchange Trade System.
China's business press carried the story above on Thursday. China.org.cn has not checked the stories and does not vouch for their accuracy.
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