New forex rules seek to balance capital flow
China's revised foreign exchange rules, announced last week, have been taken as an enhanced effort to curb speculative capital inflow, but analysts said they mainly aimed to balance capital outflow and inflow and fill the loopholes in the previous forex regime.
The new rules, which went into immediate effect on Wednesday, will play a role in curbing the influx of speculative capital, analysts said.
The new regulation provides heavy penalties for improper currency transfer and conversion, among other moves. Analysts said they were intended to respond to the fast growth in the country's foreign reserves, which have amounted to about $1.8 trillion, part of which is believed to be speculative money eyeing exceptional returns as the yuan appreciates.