RISK MANAGEMENT

China Relaxes Policy That Restricts Yuan Outflow

China has a relaxed a policy that restricts banks from processing outbound yuan payment and remittance requests from their corporate and individual client, reports the South China Morning Post.

The move is expected to help boost liquidity in offshore yuan markets, especially Hong Kong.

Citing sources, the Post reports that the previous policy, imposed by the People’s Bank of China in early January, prevented some banks from transferring profits made by foreign companies based in China overseas if the lenders did not have a surplus of yuan payments coming into the country.

While the relaxed policy doesn’t cover cross-border foreign exchange flows or big outbound investment deals, it was the first relaxation of outbound capital control in nearly two years, the sources told the Post.

The yuan’s exchange rate against the dollar has been stabilizing in recent trading sessions. Chinese Premier Li Keqiang has said that market confidence in the yuan had “significantly improved.”

 

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