China SAFE Eases Restrictions On Bank FX Positions

The State Administration of Foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (SAFE), China's foreign exchange regulator, announced today that it will allow banks to issue more FX-related products for risk-hedging purposes. This will include allowing banks to hold bigger short-dollar positions at the end of the day, according to a statement on its website.

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SAFE, which is responsible for drafting rules and regulations governing foreign exchange market activities and managing the state foreign exchange reserves, announced the move as part of the Chinese government’s plans to create a more open economy, while implementing a policy of more rigorous inspections of foreign exchange businesses as previously reported by Finance Magnates.

SAFE said the change would help maintain onshore Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term of foreign currency while reducing exchange rate risk. The adjustment comes as the yuan remains under depreciation pressure as Beijing remains in a monetary easing stance while the U.S. Federal Reserve contemplates raising rates, which would further support the dollar. This provides policy space for SAFE to allow banks more latitude shorting the dollar.

The regulator said that China will further step up monitoring of trade-related investment since trade transactions have in the past been used as a mechanism to conceal capital inflows and outflows.