PBC mulling over policy options to deal with capital flows

Beijing

CHINA'S central bank views with concern the risk of volatile flows of capital into and out of the nation in the coming months, and is preparing steps to help address the danger, according to people familiar with the matter.

Two options under consideration are widening the band in which China's currency, the yuan, is allowed to fluctuate and guiding the exchange rate gradually lower by adjusting the fixing against the greenback, according to the people, who asked not to be named as the discussions are private. The yuan is now subject to a maximum 2 per cent divergence on either side of a daily reference rate set by the People's Bank of China (PBC).