In the past years and in line with the increasing internationalization of RMB, foreign exchange control in China has been gradually relaxed. Even in relation to capital account items, the State Administration of Foreign Exchange (“SAFE”) had delegated a considerable amount of functions to the banks. However, in recent months it seems that the Government got the impression that there are excessive levels of capital outflow. Also concerns arose because due the expectation that the RMB will be depreciated, a considerable number of cases of short selling RMBs occurred in offshore markets. Thus, in the past weeks, the SAFEs, both at central and local levels, and the People’s Bank of China (“PBOC”) enacted a number of restrictive measures.
Please click the Source Link below for an overview on the main developments.