China Aims To Open Domestic FX Market

China’s Forex regulator wants the nation to open up its domestic market, reports said Friday (Mar. 3).

An article in a publication owned by the regulator called for a more open, competitive domestic foreign exchange (FX) market that enables a flexible FX rate mechanism to mitigate against cross-border capital fluctuation, according to reports. Deputy head of the State Administration of Foreign Exchange Fang Shangpu penned the article.

“[China should] increase the depth of the foreign exchange market, increase the number of trading tools and market participants, and establish a multi-tiered and inclusive trading platform,” the article stated.

The article follows an announcement from the regulator last week that said it would enable foreign investors to enter its interbank bond market and trade FX derivatives, according to reports.

Fang added that China must “strengthen checks of banks’ foreign exchange business to ensure authenticity and compliance.”

The statement echoed similar calls by the regulator for stricter capital outflow rules.

Earlier reports this year found China’s FX reserves to be at a six-year low, falling under $3 trillion in January. The statistics, released by the People’s Bank of China, are a sign of those capital outflows despite the central bank’s efforts to curb the issue. Despite the drop, SAFE said those reserves are adequate.

Recent data released by SWIFT also found that global use of the yuan had declined in 2016, overtaken by the Canadian dollar as the fifth most used currency on the planet.