Bringing in more patsies to handle Old Maid Cards:
Associated Press
Report: China Banks to Get Dollar Dealings
Monday November 29, 12:11 am ET
By Elaine Kurtenbach, AP Business Writer
Report: China to Let State Banks Handle More U.S. Dollar Dealings
SHANGHAI, China (AP) -- Regulators may let China's four biggest state banks become market makers in U.S. dollar trading, paving the way for less currency intervention by the central bank, a state-run newspaper reported Monday.
A market maker agrees to act as either a buyer or seller in a financial transaction when no other party can be found. The People's Bank of China, the central bank, is now China's key market maker in U.S. dollar trading due to tight restrictions on foreign exchange dealings.
Draft measures for expanding the number of market makers for U.S. dollar trading have been completed, and the State Administration of Foreign Exchange -- China's top foreign exchange regulator -- will decide when to announce them, the China Business Post reported.
China's four biggest banks -- Industrial & Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China -- would be the first market makers to be approved, the report said, citing unnamed sources.
The report gave no time frame for the proposal's implementation.
China tightly controls trading in its currency, the yuan, and sets its value within a narrow band at about 8.28 yuan per U.S. dollar.
The reported plan to allow more market makers would not directly affect the yuan's value. But it is part of a broader series of reforms aimed at eventually loosening restrictions on currency trading.
By expanding the number of financial institutions authorized to handle U.S. dollar trading, regulators hope to slow the surge in China's foreign exchange reserves, which are held by the central bank.
That move would be "very welcome," said Xia Bin, an official in a research department under the State Council, China's Cabinet.
The plunge in the U.S. dollar's value against many key currencies has obliged China's central bank to boost dollar buying to keep the value of the yuan steady. That, coupled with strong foreign direct investment and exports, had by late September boosted foreign exchange reserves to almost US$515 billion (euro396 billion).
The dollar's fall has prompted mounting speculation that China might adjust the yuan's value against the dollar soon. Central bank officials have responded by saying they have no timetable for foreign exchange reform.
The yuan will "continue to remain stable at a basically reasonable and balanced level," the China Securities Journal cited Li Ruogu, deputy governor of the People's Bank of China, as saying at a meeting Sunday of the Asia Pacific Economic Cooperation countries.
"It's impossible for us to completely stop speculative forces or behavior, but we don't want to see domestic or overseas individuals or institutions speculate on the yuan," the report, published Sunday, quoted Li as saying. |
