China FX forwards move prompts questions over government motives
As reports of new measures catch the market off-guard
Reports of the Chinese government planning to impose special reserve requirements on domestic banks trading foreign exchange forwards have led analysts to debate whether the move, which remains unconfirmed, is part of a grand design to liberalise financial markets or an emergency measure aimed at stemming capital outflows.
Citing sources with "direct knowledge of the matter", Reuters reported on September 1 that China would require banks trading currency forwards to deposit 20% of the sales
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