China Relaxes Controls Over Exchange Rates
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Version 0 of 1. China said it would permit banks to set their own exchange rates for the renminbi against the dollar in deals with clients, in a step to relax controls to make the currency more market-driven. Chinese officials have pledged to loosen interest rates and currency controls eventually to help put its economy, the second largest in the world, on a more sustainable footing, but such changes have so far been gradual. Effective Wednesday, banks can set the dollar/renminbi exchange rate in their over-the-counter deals based on market demand. Rates that banks offer will be guided by the interbank market, which is still subject to controls including the central bank’s daily midpoint. From there, the spot rate may fluctuate in either direction by only 2 percent. |