Pushing China's foreign exchange reform ahead by another step, the central bank yesterday carried out its first currency swap deals with local banks in a move that could help bring more flexibility to the market.
The People's Bank of China confirmed that it was carrying out its first foreign exchange swap deal yesterday, but would not give more details. A Beijing-based trader for a major state-owned bank said that the central bank offered one-year currency swaps worth US$6 billion at 7.85 Chinese yuan per dollar.
In spot dealings, the yuan closed at 8.0805 to the dollar on Thursday.
Analysts said that it wasn't clear exactly what mechanism the central bank was using in its swaps transactions, but said it could be selling dollars and buying yuan on the spot market, and a year later could reverse the deal at the set rate.
That would have the effect of removing yuan from the money market. At the same time, the central bank could use the swap rate to signal its expectations about how fast it expects the yuan's value to rise, they said.
The swap deal didn't seem to have any immediate effect on the onshore yuan spot market.
Offshore, nondeliverable forwards -- a measure of expectations for the yuan's value that has no direct impact on current exchange rates -- moved toward the one-year swap rate set by the central bank, to 7.78 in the morning from 7.75 late Thursday.
Late Thursday, China's State Administration for Foreign Exchange announced it would also introduce a new currency trading system allowing interbank market members to trade directly with each other. It also invited qualified members to apply to become market makers for yuan spot trading.
A market maker agrees to act as either a buyer or seller in a financial transaction when no other party can be found.
Currently, the central bank is China's key market maker in US dollar trading due to tight restrictions on foreign exchange dealings, though regulators earlier announced they were considering letting other banks become market makers.
The yuan doesn't trade on world markets and Beijing sharply restricts buying and selling on the sole official Chinese exchange. Daily fluctuations in the yuan's value, which is linked to a basket of currencies of major trading partners including the US, are limited to 0.3 percent up or down from its opening level.
Since a 2.1 percent revaluation of the yuan on July 21 to 8.11 yuan per dollar, the Chinese currency has gained only 0.36 percent.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique