China’s foreign exchange regulator has dismissed reports of tightened controls over forex sales, saying no new restrictions have been adopted on currency exchange or cross-border payments.
Regulations are consistent with the past with no policy changes. All forex transactions are being conducted normally, according to a statement from the State Administration of Foreign Exchange (SAFE).
However, the regulator has demanded banks examine the authenticity of transactions more closely and ensure their compliance with current rules, SAFE said.
The clarification followed media reports that SAFE had given “window guidance” to banks, instructing them to narrow an expanding deficit between forex sales and purchases amid concerns over capital outflow and as the yuan weakens against the US dollar.
The reports were inaccurate, SAFE said, while emphasizing the need for better monitoring of cross-border capital flows and vigilance against illegal forex trading.
Chinese banks saw net forex sales of $69.6 billion in the third quarter, up from $49 billion in the second, but much lower than the $124.8 billion in the first.
The central parity rate of the Chinese yuan against the US dollar weakened to a six-year low on Oct 28, as expectations of an interest rate hike in the United States grew.