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China Tightens Rules on Transfers to Stop ‘Hot Money’

 
Anonymous Coward
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11/25/2009 11:20 PM
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China Tightens Rules on Transfers to Stop ‘Hot Money’
China Tightens Rules on Transfers to Stop ‘Hot Money’
(Update1)

[link to www.bloomberg.com]

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.

The yuan was little changed at 6.8286 per dollar as of 12:52 p.m. in Shanghai, according to China Foreign Exchange Trade System. Chinese authorities have kept appreciation in check since July 2008, following a 21 percent gain in the previous three years, to help exporters weather sliding demand in the U.S., Europe and Japan.

Cash Transfers

The rules, which are designed to prevent conversion for investment purposes, limit both the sending of foreign currency into China as well as the transfer of cash following conversion into yuan.

“If you live in Hong Kong, convert 20,000 every day; it’s a slow way to get rich,” said Jim Rogers, chairman of Rogers Holdings, in an August interview in Singapore. He said he buys yuan “whenever I get the chance.”

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.

--Judy Chen. Editor: Sandy Hendry, Simon Harvey

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at +86-21-6104-7047 or [email protected].
Last Updated: November 25, 2009 00:44 EST
anonymous
User ID: 826842
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11/26/2009 01:44 AM
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Re: China Tightens Rules on Transfers to Stop ‘Hot Money’
funny money games again. wrecking ball endgames





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