$3.5b overseas investment quotas been granted

China's State Administration of Foreign Exchange (SAFE) has granted quotas worth 3.5 billion U.S. dollars to two Chinese commercial banks to buy overseas financial investment products on behalf of their customers.
The China Construction Bank received a quota of two billion dollars, and the Bank of Communications 1.5 billion dollars, the SAFE said in a statement on its website on Wednesday.The central bank, the People's Bank of China, in April gave the green light to commercial banks to invest in fixed-return products in overseas financial markets.As the government still imposes controls on capital projects, the banks are allowed to buy foreign currencies from the central bank within their approved quota.
The move is a step toward the reform of the foreign exchange management system and is aimed at easing the pressure on the Renminbi as the country's foreign exchange reserves soar.In late July, the Industrial and Commercial Bank of China (ICBC), the Bank of China and the Bank of East Asia became the first banks to get the quota, with a total portfolio of 4.8 billion dollars.The ICBC, the biggest bank in China, became the first bank to sell overseas investment products to customers on Monday.Analysts said the government seemed to have accelerated the implementation of its Qualified Domestic Institutional Investors (QDII) scheme since June, when the country's trade surplus hit a new monthly high of 14.5 billion dollars.
Relaxing controls on capital outflow could help ease the pressure on the Renminbi to further appreciate, as China's bank savings and foreign exchange reserves continued to rise.



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