China simplifies rules for holding foreign currencies

Dec 29 | Updated: Dec 30 2006, 05:30am hrs
Chinas central bank has relaxed capital controls to make it easier for individuals to use more than $1 trillion of the nations foreign currency reserves to buy stocks and bonds abroad, in a move to pare demand for the yuan.

Individuals can swap yuan for US dollars, yen and other currencies based on an annual quota starting on February 1, 2007, as the central bank abandons the current method of requiring each transaction to be approved by the State Administration of Foreign Exchange, the People's Bank of China said on Friday in a statement. China is trying to ease pressure on the yuan with this new policy by encouraging people to buy foreign currency, Malayan Banking Bhds Shanghai-based treasury dealer Jeffrey Tang said on Friday by phone.