Forex regulator to boost supervision over capital flows

(Xinhua)
Updated: 2008-06-25 07:42

BEIJING - China's top foreign exchange regulator Hu Xiaolian has pledged more efforts to boost supervision of capital flows to safeguard the nation's financial security.

Hu, also a deputy central bank governor, said the country was faced with a bigger challenge of guarding against the impact of the short-term global speculative funds.

More efforts should be made to prevent capital flows in the disguise of trade and to boost management on short-term overseas loans. Hu made the remarks during recent research and investigation tours to Dalian, Suzhou, and Wuhan.

The turbulence on the global financial market, the rate changes of the major currencies, and the price ups and downs of the energy and grain could had a huge impact on the capital flows, Hu said.

Analysts estimated that hundreds of billions of U.S. dollars of speculative funds had entered China on weakening dollar and betting on further appreciation of the Chinese currency, the yuan.

Zuo Xiaolei, chief economist with Galaxy Securities, on Sunday warned against large-scale capital flight in case the dollar rebounded against other currencies.