China to Start of the New Year with Relaxed Restrictions
For the coming new year China will start relaxing its restrictions on yuan trading as some say a daily caps of a bank foreign exchange position with weekly limits and it will also be the first time that a unified standard for total foreign exchange position is established.
SAFE of the State Administration of Foreign Exchange has published a new set of rules that will simplify 14 set of related regulations and will be adding new provisions that will liberalize banks forex trading practices. As one senior dealer of a major European Bank in China said that the timing is well placed as the U.S. dollar is strengthening globally and emerging market currencies are suffering from a lingering weakness thus, relaxing restrictions was just the thing needed.
So far in December the yuan has lost 1.3 percent and is looking to close the year at 2.8 percent while facing pressure which financial analysts are expecting to last until 2015. Starting Thursday the State Administration of Foreign Exchange will be looking into bank’s position compliance every week, which is based on the new rules that will leave them a leeway for short dollars within the period. While banks are managing their positions on a weekly basis, the average daily position must be kept within the limits that is defined by the State Administration of Foreign Exchange.