Tuesday, November 17, 2009

Forex controls to curb black market

Forex controls to curb black market currency trade

"Foreign exchange controls are needed to curb illegal forex trade in the black market and maintain market order," it said.

"They're trying to reel in the illegal channels, otherwise that will create fund flows . . . that could be out of control," said Joseph Tang, head of China research at Sun Hung Kai Investment Services in Hong Kong.

The yuan on the black market, which spiked after the B share opening, was announced to as high as 8.70 from a normal level of around 8.50, had already begun retreating on Thursday.

The joint statement said investors could open trading accounts with brokerages from Monday. On Wednesday, Shanghai investors opened 1,125 B share accounts -- a three-year high.

Investors in cities from Beijing in the north to the southern boomtown of Shenzhen flocked to brokerages.

Companies listed on the China B market boast a total market value of little more than $8 billion, compared with the $600 billion value of the China A market, which is off limits to international investors.

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