China’s Forex regulator said over the weekend that it will ramp up risk control efforts, push ahead with regulatory reforms and look to accelerate the development of the worlds second largest economy’s Forex market further in 2016.
Within the past year we have seen numerous global financial cities open up Renminbi hubs in preparation for further reforms. The State Administration of Foreign Exchange (SAFE) made the comments in a statement on its website after concluding an internal meeting.
China says according to Reuters reports that they will also continue to promote the orderly opening of China’s capital account and improve its management of Forex reserves, it said. China’s financial regulators have come under heavy scrutiny after a surprise devaluation of the yuan back on August 11th sharply accelerated capital outflows as a flight-to-stability ensued.
Beijing this past week allowed the biggest fall in the yuan in five months (see 1 year U.S. Dollar/Offshore Renminbi chart below), putting volatility into the first trading week of the year and sending global stock markets tumbling as investors feared it could trigger more competitive currency devaluations.
Most major Forex brokers are now offering trading on spot USD/CNH. However, liquidity is still low and spreads wide, but one day people imagine this currency pair could potentially rival that of EUR/USD (the most traded currency pair in the world).