Forex-Here.com All about Forex

On September 26 Financial site Bloomberg reported that because of risk aversion slowing capital inflows into appearing markets will hit India's rupee the most and China's yuan the least. This statement was made by Morgan Stanley.

According to the announcement of the state media the government of the country strengthened the controls on the way the foreign companies spend the money they bring. This action was made with the aim to decrease the volume of inflation inflows. Due to this regulation the State Administration of Foreign Exchange will be responsible for the controls of the way foreign companies use foreign currency.

According to the statement of the Chinese government individuals and any kind of companies will get the opportunity of limited foreign exchange transactions. It will be a kind of temporary trial experiment.

China is going to open new offshore currency market. It is exact place is not defined yet though the possible cities to host it are Shanghai, Hong Kong and Tianjin. The currency of the country won’t become fully convertible one but nevertheless foreign companies as well as national ones will be able to trade it. Furthermore national institutions will get certain tax benefits in this case.

A foreign exchange rate department was created in the People’s Bank of China with the aim to determine currency policy and control international capital flows. This announcement made by the bank was confirmed by the State Council, China’s Cabinet and issued at the website of the central bank. Previously the currency policy related to the monetary policy department of the bank. But according to the China Securities Journal the action undertaken by the monetary policy department were insufficient. The main purpose of this new department is to arrange joint work of those branches of monetary policy department and of the State Administration of the Forex that work with foreign exchange and other corresponding issues.

Due to the announcement made by the government China has revised main foreign exchange rules. This is the first alteration for the last 11 years. These changes are intended to increase the control over the fund flows and slow the forex reserves growth. As for the Chinese currency it is probably won’t be affected by the changes made. They will have only a psychological impact on the yuan.
According to the forex trader in Shanghai all these changes are nothing but the reflection of the positive situation occurred in the country at the beginning of the Olympics.