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China makes it easier for firms to borrow from overseas as yuan drops

Economy Oct 24, 2022 10:00PM ET
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© Reuters. FILE PHOTO: Paramilitary police officers stand guard in front of the headquarters of the People's Bank of China, the central bank (PBOC), in Beijing, China September 30, 2022. REUTERS/Tingshu Wang
 
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SHANGHAI (Reuters) - China's central bank and foreign exchange regulator on Tuesday raised the cross-border macro prudential adjustment ratio for corporates and financial institutions, making it easier for domestic firms to raise funds from overseas markets.

The People's Bank of China (PBOC) said in a statement it raised a parameter on cross-border corporate financing under its macro-prudential assessments to 1.25 from 1.

Tuesday's move will "increase the sources of cross-border funds for enterprises and financial institutions, and guide them to optimise the asset-liability structure," the PBOC said in the statement posted on its website.

The move, which reverses a previous adjustment in 2021 to tighten overseas financing, comes at a time the Chinese yuan faces renewed depreciation pressure. Allowing more capital inflows could alleviate such downside pressure.

The yuan has lost 13% against a buoyant dollar so far and looks set for the biggest annual drop since 1994, when China unified market and official rates.

China makes it easier for firms to borrow from overseas as yuan drops
 

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