China Will Crack Down on "Hot Money"

January 7th, 2011
in News, Banking

Bloomberg:  China’s currency regulator said it will continue to crack down on “hot money” inflows and step up monitoring of cross-border capital flows this year.

Follow up:

The State Administration of Foreign Exchange will deepen reform for the yuan exchange rate mechanism and improve foreign- exchange-reserve management, the regulator said today in a statement on its website, after its annual work meeting.

Separately, China’s central bank will manage liquidity in the banking system, guide steady growth of loans and enhance currency flexibility, the People’s Bank of China said in a statement today after its annual work meeting.

China is seeking to counter the fastest inflation in more than two years and limit asset bubbles in real estate after record lending drove the nation’s economic recovery. Prospects for gains by the yuan may encourage investors to pump more money into the economy.

The measures also underscore government concerns that the U.S. Federal Reserve’s expanded monetary stimulus may cause capital inflow into China, inflating asset values and adding pressure for the yuan to rise. China’s inflation reached a 28- month high of 5.1 percent in November.  Read more at Bloomberg.....

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