In another step toward a more freely traded currency, the government on Thursday said that it would remove restrictions on how much foreign exchange domestic companies can buy to fund overseas acquisitions or expansion.
Companies may use their own holdings, buy foreign exchange from regulators or borrow from overseas or domestic lenders to invest abroad starting July 1, the State Administration of Foreign Exchange said in a statement on its Web site.
China is gradually loosening controls on the yuan after ending a decade-old peg to the dollar in July. Surging exports helped drive the nation’s foreign-exchange reserves up 33 percent to a record $875.1 billion in the year to the end of March, putting pressure on the yuan to appreciate. [Full Text]