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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2794)	3/12/2004 6:39:26 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China clamps down on non-residents' yuan speculation Reuters, 03.12.04, 5:20 AM ET SHANGHAI, March 12 (Reuters) - China has halved the amount of dollars non-residents can change into yuan as it wages a battle to prevent people from speculating on a possible revaluation of the pegged currency. From this month, non-mainland Chinese are limited to buying $10,000 worth of yuan a day, down from $20,000 previously, and up to a maximum $50,000 a month, the State Administration of Foreign Exchange (SAFE) said in a statement on its Web site www.safe.gov.cn. Guo Shuqing, SAFE's chief, was cited this week by state media as saying expectations of a yuan revaluation could backfire. Rampant speculation -- to the tune of $40-$50 billion in hot money inflows in 2003 according to Standard & Poor's -- is applying upward pressure on the yuan, making it tough for Beijing to rein in rapid money growth amid growing fears of inflation. Approval from SAFE was needed on a case-by-case basis for sums in excess of new ceilings. The new rules applied to all designated foreign exchange banks. The Bank of China -- the nation's premier foreign exchange bank -- declined comment. "We've been told it's to curb speculation," said a teller at a branch of the Bank of China in Shanghai's financial district. Speculation has mounted that Beijing may be quietly considering widening the yuan's wafer-thin trading band or re-pegging it to a basket of currencies, a move that could deflect U.S. pressure for a yuan revaluation. The yuan <CNY=CFXS> has become a thorny election issue in the United States, where manufacturers have said Beijing's exchange rate policy gives Chinese exporters an unfair advantage in world markets. Copyright 2004, Reuters News Service forbes.com