China's central bank announced here Tuesday it was adopting new foreign exchange policies in a bid to secure its domestic businesses against risks brought by the Renminbi's rate change.

Banks that offer spot exchange settlements and sales can all apply for forward exchange settlements and sales business, said a circular issued by the People's Bank of China (PBC), the country's central bank.

Domestic companies can now sign agreements with more qualified banks for exchanges between Renminbi and a foreign currency on certain future dates at a set rate.

Moreover, the business is being expanded from the three major items of trade, service, and proceeds to all current transactions. Some capital and financial transactions are also included.

Meanwhile, banks with forward exchange settlement and sales business for more than six months can apply for swap transactions between the Renminbi and foreign currencies, said the circular.

The new policy is an important measure to improve the formation mechanism of the Renminbi rate, said the central bank.

After the reform of the Renminbi exchange rate last month, Chinese companies face more risks brought by the exchange rate change.

The Bank of China started a forward exchange settlement and sales business in 1997, the first Chinese financial institution allowed to offer such a service. Four state commercial banks and three stock commercial banks have been approved by the PBC to do the business.

(Xinhua News Agency August 10, 2005)