China to set up a state forex investment unit - state media |
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Thu, 01 Feb 2007 04:21
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SHANGHAI (XFN-ASIA) - The government is expected to introduce a number of foreign exchange reform measures this year including setting up a state forex investment company, the China Securities Journal reported, citing a state official that it did not name.The government is likely to reorganize the central bank's investment arm, China Huijin Investment, into the forex company, which will buy and invest in foreign exchange reserves, using funds raised from the issue of yuan-denominated bonds, the report said.In a bid to rein in excessive liquidity and relieve pressure from the country's huge trade surplus, the government also plans to make the yuan exchange rate more flexible, it said.Restrictions on foreign institutions investing in domestic capital markets will be loosened, while the government is planning to extend quotas under the QFII (Qualified Foreign Institutional Investors) scheme this year.Meanwhile, the investment scope for QDIIs (Qualified Domestic Institutional Investors) like banks, insurance companies and securities brokerage, will be expanded further.The report added that regulators are also looking at yuan options, along with non-deliverable forwards against foreign currencies, in the domestic forex market.It will also encourage banks to come up with more innovative financial derivatives products.(1 usd = 7.77)lilian.wu@xfn.com
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