China makes it easier for companies to borrow from abroad as the yuan falls By Stocksak

© Stocksak. FILE PHOTO – Paramilitary officers stand guard at the People’s Bank of China headquarters in Beijing, China, September 30, 2022. REUTERS/Tingshu Wang

SHANGHAI (Stocksak), China’s central bank and foreign currency regulator raised Tuesday the cross-border macro prudential adjust ratio for corporates, financial institutions and corporations. This will make it easier for domestic companies to raise funds from overseas markets.

The People’s Bank of China said in a statement that it raised a parameter for cross-border corporate funding under its macroprudential assessments from 1.25 to 1.

The PBOC stated in a statement that Tuesday’s move would “increase the source of cross-border funding for enterprises and financial institutions, as well as guide them to optimise their asset-liability structures,” according to a statement posted on its website.

This action reverses a previous adjustment made in 2021 to tighten international financing. It comes at a moment when there is renewed depreciation. These downside pressures could be eased by allowing capital to flow more freely.

The yuan has seen a 13% decline against a buoyant dollar thus far. It is expected to experience the largest annual drop since 1994 when China established unified market rates and official rates.

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