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For months now, banks in China have been calling clients large and small, asking questions. Why do you want to convert yuan into a foreign currency? When exactly will you convert more? Can you supply more documentation?
The questions have been as much a preview as a warning, that in Beijing decision-makers are worried about the enormous sums of money leaving the country in cash, investments and overseas acquisitions. The yuan has skidded nearly 6 per cent this year.
Now, regulators are contemplating new measures that could include detailed scrutiny of purchases outside China and a temporary cap on overseas buying, set at $10-billion (U.S.) for foreign investments, $1-billion for assets outside a company’s core business and $1-billion for real estate purchased by state-owned companies, according to a South China Morning Post report.
The threshold for central government vetting of foreign exchange transactions will also fall from $50-million to $5-million, Reuters reported.