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China to allow corporate currency swaps

Source:   Time:

China will allow designated banks to trade currency swaps for corporate clients starting March 1st in a move aimed to help enterprises hedge against exchange rate risks. The State Administration of Foreign Exchange says it will simplify market entry approval procedures, allowing banks which have operated Renminbi and foreign currency swaps for one year to start offering currency swap services to clients.

The banks can determine which currencies to trade and the swap terms, but the interest rates offered should be set by both sides and must be in line with China's central bank's management rules on deposit and loan rates. China opened the interbank market to currency swaps in August 2007 the newly issued rules provide more space for enterprises reduce risks from volatile exchange and interest rates.

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