New move to globalize yuan
CHINA will allow domestic companies to use the yuan to settle direct outbound investment under a pilot program as it seeks to internationalize the currency and liberalize its capital account.
Meanwhile, the People's Bank of China set the yuan's central parity rate at a record high since it depegged the currency from the US dollar.
Domestic firms and banks in areas where cross-border trade yuan settlement is allowed can take part in the yuan settlement for direct overseas investment, the central bank said.
China is gradually pushing the globalization of its currency. It allows 20 provinces or municipalities to settle cross-border trade in yuan.
"The overseas direct investment yuan settlement will help expand the yuan's influence and support companies to go overseas," the PBOC said yesterday in a statement on its website. "It will further simplify trade and investment procedure."
Chinese companies can use the yuan to invest in new ventures, for mergers and acquisitions and to buy stakes with immediate effect, the PBOC said in the statement.
Those participating in the trial program must disclose the amount of their proposed outbound investment to regulators, the PBOC said.
Also yesterday, the central bank set the yuan's central parity at 6.5997 per US dollar, the first time it breached the important 6.6 barrier. The yuan yesterday slipped 0.1 percent to close at 6.6046 in Shanghai, according to the China Foreign Exchange Trading System. The yuan is allowed to trade 0.5 percent on each side of the central parity rate, or the daily fixing.
The yuan hit a high of 6.5931 against the greenback in trading on December 31, the strongest level since 1993.
"Flighting inflation is a policy priority and rising crude oil prices triggered concerns of imported inflationary pressure," said Lu Zhengwei, an Industrial Bank senior economist, yesterday.
Meanwhile, the People's Bank of China set the yuan's central parity rate at a record high since it depegged the currency from the US dollar.
Domestic firms and banks in areas where cross-border trade yuan settlement is allowed can take part in the yuan settlement for direct overseas investment, the central bank said.
China is gradually pushing the globalization of its currency. It allows 20 provinces or municipalities to settle cross-border trade in yuan.
"The overseas direct investment yuan settlement will help expand the yuan's influence and support companies to go overseas," the PBOC said yesterday in a statement on its website. "It will further simplify trade and investment procedure."
Chinese companies can use the yuan to invest in new ventures, for mergers and acquisitions and to buy stakes with immediate effect, the PBOC said in the statement.
Those participating in the trial program must disclose the amount of their proposed outbound investment to regulators, the PBOC said.
Also yesterday, the central bank set the yuan's central parity at 6.5997 per US dollar, the first time it breached the important 6.6 barrier. The yuan yesterday slipped 0.1 percent to close at 6.6046 in Shanghai, according to the China Foreign Exchange Trading System. The yuan is allowed to trade 0.5 percent on each side of the central parity rate, or the daily fixing.
The yuan hit a high of 6.5931 against the greenback in trading on December 31, the strongest level since 1993.
"Flighting inflation is a policy priority and rising crude oil prices triggered concerns of imported inflationary pressure," said Lu Zhengwei, an Industrial Bank senior economist, yesterday.
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