Central Bank of China has developed a new tax rules for foreign exchange transactions, which led to a decrease in value of the yuan by 0.26% against the dollar. This is the biggest drop in the last two months. People's Bank of China hopes to reduce currency speculation, which are the difference of the rate on the mainland and offshore.
The initial rate of fees on foreign currency transactions - called the Tobin tax after the awarding of the Nobel Prize James Tobin - may be zero, before the adoption of the final innovation. The tax will be designed so as to be able to conduct lawful currency transactions, such as hedges, for targeted currency speculation.
"Duty bad impact on market sentiment and start some panic among investors, and this again shows the drawbacks to monitor the forex market and limit capital outflows," Andy Ji, a strategist at Forex market from Singapore and economist at Bank of Australia.
Tax on foreign exchange transactions will be based on increasing the role of market forces in the world's second largest economy, as well as in China's quest to secure the yuan as a global reserve currency. It is expected that the yuan will be included in a backup currency basket of the International Monetary Fund, in October this year.
The new rules will take effect only after approval by the Chinese government.
The People's Bank of China today set the value of the yuan against the dollar to a mark - 6.5079, is 0.26% worse than yesterday's performance. Maximum daily fluctuations may not exceed 2%, both in bull and bear currency movements.
Gap (the gap) between the courses in the country and in offshore areas, amounted to about 0.07%, far below the 2.9% in January this year.
It is also considered another reason for reducing the value of the yuan. Zhou Hao, an economist at Commerzbank AG in Singapore, said: "Today, the weakening of currencies in high places may indicate a reluctance of the Chinese People's Bank to try to maintain the yuan, which could lead to a prolonged bearish trend."
The initial rate of fees on foreign currency transactions - called the Tobin tax after the awarding of the Nobel Prize James Tobin - may be zero, before the adoption of the final innovation. The tax will be designed so as to be able to conduct lawful currency transactions, such as hedges, for targeted currency speculation.
"Duty bad impact on market sentiment and start some panic among investors, and this again shows the drawbacks to monitor the forex market and limit capital outflows," Andy Ji, a strategist at Forex market from Singapore and economist at Bank of Australia.
Tax on foreign exchange transactions will be based on increasing the role of market forces in the world's second largest economy, as well as in China's quest to secure the yuan as a global reserve currency. It is expected that the yuan will be included in a backup currency basket of the International Monetary Fund, in October this year.
The new rules will take effect only after approval by the Chinese government.
The People's Bank of China today set the value of the yuan against the dollar to a mark - 6.5079, is 0.26% worse than yesterday's performance. Maximum daily fluctuations may not exceed 2%, both in bull and bear currency movements.
Gap (the gap) between the courses in the country and in offshore areas, amounted to about 0.07%, far below the 2.9% in January this year.
It is also considered another reason for reducing the value of the yuan. Zhou Hao, an economist at Commerzbank AG in Singapore, said: "Today, the weakening of currencies in high places may indicate a reluctance of the Chinese People's Bank to try to maintain the yuan, which could lead to a prolonged bearish trend."
