In a move aimed at enhancing confidence in the yuan and bolstering onshore foreign exchange liquidity, China has raised the macro-prudential adjustment parameter for cross-border financing from 1.5 to 1.75. The decision, announced on Monday by the People’s Bank of China (PBOC) and the State Administration of Foreign Exchange, allows Chinese corporations and financial institutions to access higher levels of borrowing from overseas.
The change is designed to expand the range of cross-border funding available to Chinese enterprises and financial institutions, encouraging them to optimize their asset-liability structures. This initiative is part of a broader strategy to strengthen the stability of the yuan’s exchange rate and support the nation’s economic growth.
Additionally, the PBOC emphasized that the move is aligned with the China FX Committee’s recent efforts to stabilize the foreign exchange market. At a recent meeting, the committee highlighted its intention to enforce strict self-regulatory standards and swiftly address any actions that disrupt market order or mislead the public.
The committee also reiterated its commitment to supporting the real economy by ensuring a stable exchange rate environment, helping enterprises and residents avoid exacerbating cyclical financial behaviors. This comprehensive policy adjustment signals China’s continued focus on fostering financial stability while enhancing the yuan’s global standing.
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