The yuan closed a tad higher on the dollar on Tuesday after China signalled it was worried about possible capital outflows and imposed new rules on corporate claims to debt owed under overseas import and export trade. China's companies must register their advance payments for imports starting from November 15 and deferred payments for exports from December 1, the State Administration of Foreign Exchange said in new regulations published on Monday.
"The promulgation of the new rules amid the global financial crisis signals China's intention to prevent possible mass capital outflows which will batter the country's economy," said a dealer at a North American bank in Shanghai.
"It helps explain why the (Chinese) central bank has persistently kept the yuan in a narrow range in recent months." The yuan closed at 6.8360 per dollar versus Monday's close of 6.8381 after the central bank set the yuan's daily mid-point against the dollar at 6.8261, slightly stronger than Monday's reference rate of 6.8288.
The central bank has used its mid-point system and indirect intervention to keep the yuan virtually in a range of 6.82 to 6.85 since mid-July, when the dollar began a strong rally globally and has since jumped around 20 percent against a basket of major world currencies. Dealers said they expected the yuan to continue trading within a tight range in coming weeks, or even months, as the Chinese authorities may be waiting for the recently strong dollar trend to reverse on global markets.
Comments
Comments are closed.