China
has now given permission to banks for freely setting of their exchange rates
for the Renminbi currency in opposition to dollar in various types of over the
counter transactions. In this way, company has attempted to take another step
to make the rate involved in exchange activities from the control of
government. Previously, banks have to price the rate of exchange offered to
clients within 3 percent towards the direction of central bank’s middle point
in China on any particular day.
Forex News revealed the
report of an analyst named Cao Yang, who said that the liberalization of the
entire market has implied that the central bank perceived that the currency of
Renminbi has currently approached to the level of equilibrium. These
equilibrium levels will also permit central bank of the country towards freeing
of the currency exchange rate in gradual manner that too without bothering
about excessive levels of volatility.
FX resources have said that new
rules are not applicable to the main currency rate within the interbank market,
which subjects towards various forms of controls, including the setting of
central bank towards daily midpoint, from where people could receive spot rates
for fluctuating in varying directions by about 2 percent starting from the
month of March.
According
to the statement highlighted from People’s Bank of China in front of the
public, “Under the new policy, effective immediately, banks can price
over-the-counter exchange rates in line with market supply and demand and
without any restrictions.” NY Times
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