The government…made it easier for individuals and firms to buy foreign currency and invest abroad, including allowing domestic banks to invest in financial products outside the mainland.Read More: Nation to abandon forex quotas for investments
China eliminates forex quotas
Thursday, April 20, 2006
This week, China announced it would officially do away with caps on
capital outflows. Previously, a business or retail investor wishing to
exchange Yuan for foreign currency had to petition the government to do
so. Moreover, the amount of currency that could be exchanged was capped
at a low value. With this latest move, China has signaled that it is
ready to move towards a floating currency system, in which individuals
would be free to buy and sell as much Chinese currency as they wished.
In the short run, this should help to reduce some of the upward pressure
on the Yuan. Xinhua News reports:
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