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Tuesday, February 28, 2017, 11:33

China's onshore financial, bonds markets further opened up

By Xinhua
China's onshore financial, bonds markets further opened up
Foreign currencies are placed next to 100 yuan banknote. ( Photo / IC)

BEIJING - China's foreign exchange regulator has approved a bigger amount of foreign investment in the country's onshore financial market, official data showed on Monday.

As of Feb. 27, 278 Qualified Foreign Institutional Investors (QFII) have received quotas amounting US$89.21 billion, up from US$87.31 billion registered at the end of January, according to the State Administration of Foreign Exchange (SAFE).

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In another development, China opened its foreign exchange derivatives market to overseas non-central bank institutional investors on Monday.

China opened up its foreign exchange derivatives market to overseas non-central bank institutional investors as well as approving a bigger amount of foreign investment

The investors are allowed to trade forwards, forex swaps and options over the counter with banks, according to a SAFE circular.

Access was granted in light of the increased presence of overseas institutional investors, which held bonds worth 870 billion yuan (US$126.6 billion) by the end of 2016, up 83.4 billion yuan from 2015, SAFE said.

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China will deepen the opening-up of its foreign exchange market by creating more trade tools and allowing more participants, SAFE said

In total, 181 overseas institutions have received quotas amounting to 541.13 billion yuan (US$80.75 billion) under the RMB Qualified Foreign Institutional Investors (RQFII) program. It was 529.63 billion yuan a month earlier.

China's currency, the yuan, is convertible for trade purposes under the current account, while the capital account, which covers portfolio investment and borrowing, is largely run by the state in an effort to control capital flow.

To gradually liberalize the capital account, the government introduced the QFII and RQFII programs in 2003 and 2011, respectively, part of China's strategy to promote RMB's use overseas.

The QFII program represents China's effort to allow licensed foreign investors to invest in China's RMB denominated capital market.

The RQFII program allows institutional investors with offshore Renminbi deposits to invest in China's onshore market.

The RQFII program is currently open to 18 countries and regions, including Britain, Singapore, France, the Republic of Korea, Germany, Qatar, Canada, Australia and Luxembourg as well as China's Hong Kong Special Administrative Region.

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