Big-Bang Reforms in China’s Financial Sector. Sunanda Sen. China’s capital Account Regulation: Major Breaks. 2005: End of fixed official dollar rate for RMB at 8.27 per USD 2007:Private holdings of foreign currency allowed 2011 (September) “two-way floating” of RMB in market
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d) A deteriorating BoP signaled by
(i)movements in exchange rates with depreciations between April and August 2012 from RMB 6.30 to 6.42 per dollar….caused by currency speculation with two-way floating & widening of band in 2011 and private holdings since 2007.
(ii) Drop in Financial and Capital Account
(ii) Negative investment income flows ( with higher rates in China compared to those abroad)
e) China’s BoP no longer propped by ‘twin surpluses’.