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Nov. 25 (Bloomberg) -- China tightened rules on individuals transferring yuan and foreign exchange between bank accounts after speculation the nation’s currency will strengthen caused a surge in capital inflows.
An overseas individual or institution is not allowed to send foreign currencies to five or more Chinese individuals to convert it into the yuan on a single day or on consecutive days, the State Administration of Foreign Exchange said in a statement on its Web site today. Individuals in Hong Kong aren’t allowed to buy more than 20,000 yuan a day and daily limits also apply in China.
“The main aim of the new rules is to control inflows of hot money,” said Zhao Qingming, a senior analyst in Beijing at China Construction Bank Corp., the country’s second-largest lender. “Individuals’ cross-border transfers are an important channel for hot money to flow into China.”
The central bank said this month foreign-exchange policy will take into account global capital flows and changes in major currencies, fueling speculation it will allow the currency to strengthen as the dollar weakens. Zhao estimated a total of more than $200 billion of speculative capital entered China in the past four years.
Five or more Chinese people are not allowed “to send money into one person or institution’s yuan account after converting foreign currencies into the Chinese yuan on the same day, on the next day or on consecutive days,” the statement also said.
An overseas individual or institution is not allowed to send foreign currencies to five or more Chinese individuals to convert it into the yuan on a single day or on consecutive days, the State Administration of Foreign Exchange said in a statement on its Web site today. Individuals in Hong Kong aren’t allowed to buy more than 20,000 yuan a day and daily limits also apply in China.
“The main aim of the new rules is to control inflows of hot money,” said Zhao Qingming, a senior analyst in Beijing at China Construction Bank Corp., the country’s second-largest lender. “Individuals’ cross-border transfers are an important channel for hot money to flow into China.”
The central bank said this month foreign-exchange policy will take into account global capital flows and changes in major currencies, fueling speculation it will allow the currency to strengthen as the dollar weakens. Zhao estimated a total of more than $200 billion of speculative capital entered China in the past four years.
Five or more Chinese people are not allowed “to send money into one person or institution’s yuan account after converting foreign currencies into the Chinese yuan on the same day, on the next day or on consecutive days,” the statement also said.
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