China's Forex Regulator Not Worried about "Hot Money" Capital Outflows, Monitors U.S Policy
- The head of the department of international payments at SAFE explained that the decline in reserves was caused by the USD appreciation, which reduced the dollar value of the reserves held in other currencies.
China's financial regulators are not concerned about signs of foreign currency outflows as the economy slows, said today Guan Tao, Head of the Department of International Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term at the State Administration of Foreign Exchange (SAFE), describing the recent decline in reserves as in line with Beijing's policy goals. SAFE is however closely monitoring the impact of any changes in U.S. monetary policy as signs of greater Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term in cross-border flows appear.
It was revealed this week that China's economic growth slowed to 7.3% in Q3, lower than the government's expectation to maintain 7.5% as in Q2. China's huge foreign capital reserves also fell by about $100 billion in Q3 2014 to $3.89 trillion at the end of September, according to the country's central bank.
The declines caused speculation about "hot money" outflows from China over investors' worries about a further Chinese slowdown. Mr. Guan explained however that the decline in reserves was mainly caused by the USD appreciation, which reduces the dollar value of the reserves held in other currencies.
"Capital inflows are swinging into outflows due to recent two-way fluctuations in the yuan exchange rate and the complex external and internal environment, which is normal," Mr. Guan told a news conference according to Reuters. "Such capital outflows are not risky. The slowdown in growth of foreign exchange reserves will become a new normal and is in line with the direction of reforms," he said.
The regulator added that the Chinese central bank is on track to gradually exit from regularly intervening in the foreign exchange market and that the government will further develop derivative instruments to help companies better hedge against two-way volatility in the RMB exchange rate.
China's financial regulators are not concerned about signs of foreign currency outflows as the economy slows, said today Guan Tao, Head of the Department of International Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term at the State Administration of Foreign Exchange (SAFE), describing the recent decline in reserves as in line with Beijing's policy goals. SAFE is however closely monitoring the impact of any changes in U.S. monetary policy as signs of greater Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term in cross-border flows appear.
It was revealed this week that China's economic growth slowed to 7.3% in Q3, lower than the government's expectation to maintain 7.5% as in Q2. China's huge foreign capital reserves also fell by about $100 billion in Q3 2014 to $3.89 trillion at the end of September, according to the country's central bank.
The declines caused speculation about "hot money" outflows from China over investors' worries about a further Chinese slowdown. Mr. Guan explained however that the decline in reserves was mainly caused by the USD appreciation, which reduces the dollar value of the reserves held in other currencies.
"Capital inflows are swinging into outflows due to recent two-way fluctuations in the yuan exchange rate and the complex external and internal environment, which is normal," Mr. Guan told a news conference according to Reuters. "Such capital outflows are not risky. The slowdown in growth of foreign exchange reserves will become a new normal and is in line with the direction of reforms," he said.
The regulator added that the Chinese central bank is on track to gradually exit from regularly intervening in the foreign exchange market and that the government will further develop derivative instruments to help companies better hedge against two-way volatility in the RMB exchange rate.