[BEIJING] China will conduct checks on firms' foreign exchange buying to prevent speculation and step up a crackdown on illegal cross-border money transactions, an official at the country's foreign exchange regulator said on Thursday.
The authorities have taken some incremental steps to curb capital outflows that intensified since the country's surprising yuan devaluation last month.
Wang Yungui, head of policy and regulation department at the State Administration of Foreign Exchange (SAFE) said foreign currency demand by some firms and individuals has exceeded "the real and rational use" and that rumours about sharper yuan falls had "exacerbated the panic".
Some firms had bought large amounts of foreign currency to engage in speculative arbitrage, he said.
Chinese banks have been told to bolster management of foreign exchange transactions and check suspicious transactions.
The regulator will also intensify a crackdown on illegal outflows through money dealers, officials said.
But Mr Wang said the authorities will meet the "genuine and legal" demand for foreign exchange by firms and individuals.
China will press ahead with reforms to make the yuan convertible on the capital account, provided that risks are under control, he said without elaborating.
The depreciation pressure on the yuan has been "basically released" following August's devaluation, Wang said. "The yuan has become basically stable and there is no basis for large-scale capital outflows," he added.
China's central bank and commercial banks sold a net 723.8 billion yuan (S$158.8 billion) of foreign exchange in August, by far the largest on record, highlighting how capital outflows intensified in the wake of yuan devaluation.