CHINA-ECONOMY: PBOC ALLOWS FIRMS GREATER FREEDOM TO EXCHANGE CURRENCY TO HEDGE FOREIGN EXCHANGE RISK
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China's Economic Daily reported on March 13 that the People’s Bank of China had announced (March 12) that it will launch a trial that will allow multinational corporations (MNCs) greater freedom to exchange currency to help companies reduce the cost of hedging foreign exchange risk. Select firms will be allowed to purchase foreign currency whenever they like – within limits – and deposit it in the domestic bank accounts that they use for cross-border transactions. The trial will take place in Beijing and Shenzhen and local and foreign MNCs with "relatively high ratings" were invited to participate. So far the Beijing part of the trial involves only one foreign firm – Royal Dutch Shell. The other four Chinese participants are: Sinochem Group; COFCO Group; AVIC Corp; and China General Technology Group. Details of those participating in the Shenzhen trials of the program were not revealed.
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