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China tightens grip on forex transactions to ease capital outflows

2015-09-10 17:26

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China's top foreign-exchange regulator has asked banks to enhance management of customers' foreign-currency transactions after August 11 when the yuan saw a sharp depreciation, according to a report by the Shanghai Securities News citing reliable sources.

The State Administration of Foreign Exchange (SAFE) has issued a circular, requiring domestic banks to keep a closer watch on individuals' suspicious foreign-currency payments that have been split into smaller parts, and to turn down clients' requests for foreign-currency purchases when necessary.

The report said transactions in which over five individuals have bought a total of more than 200,000 U.S. dollars equivalent of foreign currencies on the same day, or over several consecutive days, and then transferred the money to a same individual or institution within the past 90 days will be put on the watch list.

The SAFE also asked banks to strictly examine these transactions that involve frequent purchases and large amounts every two months.

Market observers said these measures were not aimed to restrict individuals' normal foreign-currency transactions but to alleviate the pressure on capital outflows.

In mid-August, the yuan lost 4.66 percent against the U.S. dollar in terms of central parity rate in just four days (Aug. 11- Aug.14) after China's central bank changed the way it calculated daily central parity rate on August 11.

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