China's foreign exchange regulator said on Wednesday it will allow students studying abroad to take out more foreign currency, the latest step to free up capital flows in preparation to make the yuan more flexible. The move followed the regulator's announcement on Tuesday that it will loosen restrictions on the transfer of personal assets abroad. From January 1, 2005, students going overseas would be allowed to buy up to $20,000 worth of foreign currency for living expenses per year in addition to tuition fees, the State Administration of Foreign Exchange (SAFE) said.
Students needing $20,000 or less could obtain the hard currency from banks directly, while those needing more would have to get approval from the regulator, the SAFE said on its Web site (www.safe.gov.cn).
The current limit for students is $20,000 a year for both living expense and tuition.
The SAFE said it would also simplify procedures for students to get foreign currency and the step would help "meet reasonable demand for foreign exchange by students studying abroad and perfect foreign exchange management under the current account".
In recent months, Beijing has allowed people to convert more yuan into foreign currency when travelling abroad and let companies retain more of their forex earnings.
Strong capital inflows, fuelled by speculative funds betting on a yuan revaluation, have put pressure on the currency to appreciate.
Countries like the United States have urged China to free up the yuan, which has been pegged at around 8.3 yuan to the dollar since the 1997/98 Asian financial crisis, saying the current peg of about 8.28 to the dollar is too low and makes Chinese exports unfairly cheap.
China, while resisting foreign pressure, has said it will make the yuan more flexible through reforms in its own time.
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