China’s FX regulator said on Monday it will strengthen supervision of the foreign exchange market in 2017, while improving policy transparency and promoting the further opening of financial markets.
Authorities have taken a raft of steps in recent months to curb capital flight from the country to support the weakening yuan currency, while trying to attract more foreign investment.
Pan Gonsheng, head of the State Administration of Foreign Exchange (SAFE), said China’s foreign exchange market is relatively stable and cross-border capital flows are becoming more balanced, Reuters reports, citing a statement posted on the SAFE website.
The regulator recently uncovered am underground bank in the southern city of Shenzhen involving 50 billion yuan (US$7.27 billion), and cases of firms’ using fake documents and fake trade deals to transfer foreign exchange overseas.
China’s foreign exchange reserves unexpectedly fell below the closely watched US$3 trillion level in January for the first time in nearly six years.
But the January decline was the smallest in seven months, indicating China’s renewed crackdown on outflows appears to be working, at least for now.
A recent pullback in the dollar after a multi-month rally has also helped ease pressure on the yuan and other emerging currencies, though most analysts expect depreciation pressure to resume soon as the US central bank positions for what could be several interest rate hikes this year.
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