China’s foreign exchange regulator reportedly said Saturday that it would step up its risk control efforts and would look to accelerate the development of the country’s foreign exchange market in 2016. The announcement came as China reported its biggest annual drop in foreign exchange reserves on record in 2015.
China’s State Administration of Foreign Exchange (SAFE) said Beijing will also push forward with regulatory reforms to internationalize the yuan and improve its management of foreign exchange reserves.
SAFE made the comments in a statement on its website after concluding an internal meeting, according to Reuters.
China’s financial regulators have come under heavy scrutiny after a surprise devaluation of the yuan by 2 percent in August triggered panic in the Chinese markets. China’s foreign reserves lost more than half a trillion dollars last year after the move, as the central bank bought yuan to support the exchange rate.
This week, when policy makers weakened the yuan guidance rate by 0.5 percent, stock market investors panicked and pushed the Shanghai stock market down 7 percent within minutes and triggered a circuit breaker for the second time in a week.
The week’s fall took the yuan to its lowest level against the dollar in five years, and the gap between the official price fixed by the central bank in China and the offshore price for international trading rose to about 2 percent.
"The yuan should depreciate at least 10 percent to have any impact on exports ... but I don't think the authorities will take this step," a researcher at China’s commerce ministry told CNBC.
On Friday, China ordered banks in some of the country's major import and export centers to limit their purchase of dollars this month, in its latest bid to stem capital outflows.