May 9, 2013 2:33:14 am
Chinas central bank signalled on Wednesday it was prepared to change its monetary strategy to fend off inflows of speculative capital,as Beijing struggles to control a tide of cash washing in from overseas markets.
The move came as April exports blew past expectations,which appeared on the surface to indicate that both Chinas economy and global demand were on the mend. But economists were quick to suspect the figures were artificially inflated by investors who were disguising speculative bets on the yuan as trade payments.
Faced with the risk that such inflows could cause the yuan to appreciate so quickly that it destabilises exports and the broader economy,the Peoples Bank of China (PBOC) has begun intervening heavily in the domestic currency market this year,buying up dollars and selling yuan.
This leaves the question of how to keep the yuan it has sold from distorting domestic markets. On Wednesday morning dealers told Reuters that regulators had queried them for demand for three-month bills.
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