PBOC adjusts its rules in order to increase foreign capital inflows

The People’s Bank of China (PBOC) has softened its rules on borrowings from foreign companies in order to increase foreign capital inflows into the country’s economy in the face of the yuan’s fall against the U.S. dollar to a new low of 2008.

On Tuesday, PBOC made an announcement stating an increase of the so-called macro-prudential parameter for domestic banks and companies’ cross-border financing from 1 to 1.25. The central bank expects that the increase of this parameter will allow companies to borrow more on foreign markets, thereby boosting the number of funding sources.

The announcement was made just before the yuan’s new fall to the record low of 2008. The currency fixing was set at the level of 7.1668 yuan per dollar, although the average estimate suggested the level of 7.2198 yuan per dollar.