Campaign against hot money
By Zhang Fengming |
August 5, 2010, Thursday
|
Print Edition
Print Edition
CHINA will maintain its battle against speculative "hot money" in the second half of this year after disclosing 197 irregularities in the first half, the top currency regulator said yesterday.
China checked 3.47 million cross-border transactions in the first half of the year, involving capital worth US$440 billion, the State Administration of Foreign Exchange said.
Among them, 197 cases were reported as irregular, of which 42 were settled. The remainder are being processed, the regulator said.
"We will maintain high-pressure curbs on hot money in the second half," the top currency regulator said. "We'll also introduce more currency trading products and strengthen guidelines and supervision on market makers."
The regulator also said the expectation of appreciation in the yuan eased in the first half.
Hot money is speculative capital flow that bets on the appreciation of the local currency and enters China by means other than trade or foreign direct investment.
China dropped the yuan's two-year-long de facto peg to the US dollar on June 19 to help shore up global financial stability against the credit crisis. The yuan has since gained 0.8 percent against the dollar.
China will stick to its diversification policy on its foreign exchange stockpile, the world's largest at US$2.45 trillion, the regulator said.
China's foreign exchange assets structure is unknown, though a majority is expected to be in US dollars. That's why there are fears about foreign exchange losses as the yuan gains value.
The agency said earlier that a big depreciation of the US dollar doesn't necessarily mean that China's foreign exchange reserves will be severely hit because any currency conversion loss is realized only when the exchange transaction is made. Until then, the loss remains on paper.
China checked 3.47 million cross-border transactions in the first half of the year, involving capital worth US$440 billion, the State Administration of Foreign Exchange said.
Among them, 197 cases were reported as irregular, of which 42 were settled. The remainder are being processed, the regulator said.
"We will maintain high-pressure curbs on hot money in the second half," the top currency regulator said. "We'll also introduce more currency trading products and strengthen guidelines and supervision on market makers."
The regulator also said the expectation of appreciation in the yuan eased in the first half.
Hot money is speculative capital flow that bets on the appreciation of the local currency and enters China by means other than trade or foreign direct investment.
China dropped the yuan's two-year-long de facto peg to the US dollar on June 19 to help shore up global financial stability against the credit crisis. The yuan has since gained 0.8 percent against the dollar.
China will stick to its diversification policy on its foreign exchange stockpile, the world's largest at US$2.45 trillion, the regulator said.
China's foreign exchange assets structure is unknown, though a majority is expected to be in US dollars. That's why there are fears about foreign exchange losses as the yuan gains value.
The agency said earlier that a big depreciation of the US dollar doesn't necessarily mean that China's foreign exchange reserves will be severely hit because any currency conversion loss is realized only when the exchange transaction is made. Until then, the loss remains on paper.
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