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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (14598)	11/2/2004 10:40:45 AM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

China to crack down on inflow of speculative funds BEIJING: China will tighten up management over inflows of foreign exchange and launch a severe crackdown on speculative capital inflows to maintain the country's financial stability, the government said. The State Administration of Foreign Exchange (SAFE) said illegal foreign exchange settlements by some domestic banks, companies and individuals have caused abnormal growth in the country's foreign exchange reserves. This has disrupted central government efforts to slow the overheating economy and is harmful to balanced and sustainable economic growth, SAFE said. Under China's fixed exchange rate system, funds coming into the country have to be converted into yuan, which in turn boosts the amount of money available for investment, which the government is trying to cool. SAFE did not specify what actions it would take to tighten management over foreign exchange inflows. According to SAFE figures, China posted a surplus of 66.8 billion dollars on its capital account, which is closed, and a 7.5 billion surplus on the current account. The capital account measures transfers of funds in and out of the country, while the current account measures these transfers plus trade in goods and services. China has seen huge inflows of funds since last year as international investors, in part betting on a future appreciation of the yuan, came into the country to buy into securities and real estate. China's foreign exchange reserves stood at 514.5 billion dollars at the end of September, up 111.3 billion dollars from the end of last year. - AFP channelnewsasia.com