PBOC headache to worsen with US$50,000 conversion quota
The cap on how much foreign currency individuals are allowed to change each year will be reset next month
PEOPLE'S Bank of China (PBOC) governor Zhou Xiaochuan already has one policy headache with the currency falling to near an eight-year low. He could have an even bigger one next month.
That's when a US$50,000 cap on how much foreign currency individuals are allowed to convert each year resets, potentially aggravating capital outflow pressures that are already on the rise. If just one per cent of China's almost 1.4 billion people max out those limits, that's an outflow of about US$700 billion - more than the estimated US$620 billion that Bloomberg Intelligence estimates indicate has already flowed out in the first 10 months of this year.
Middle class and wealthy Chinese have been converting money into other currencies to protect themselves from devaluation, exacerbating downward pressure on the yuan. Outflows could intensify if Federal Res…
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