China to open currency swap businesses for bank customers
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China will launch currency swap business for bank customers beginning March 1, in a move to help enterprises hedge against exchange rate risks, the country's foreign exchange regulator said Sunday.
China began currency swap business in the interbank market in August 2007, and the newly issued rules provide more tools for enterprises to reduce risks due to changing exchange rates and interest rates, the State Administration of Foreign Exchange (SAFE) said in a circular posted on its website.
The SAFE will simplify market entry approval procedures, allowing banks which have operated Renminbi and foreign currency swaps for one year to start offering currency swap services to clients, according to the circular.
Further, the SAFE said banks can determine the specific currencies and swap terms, but the interest rates offered in currency swaps are set by both sides of the trading and must be in line with the central bank's management rules on deposit and loan rates.
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