Non-financial Firms to Run Forex Services

Shanghai received approval from the top foreign exchange regulator Wednesday to let non-financial firms operate forex services.

Shanghai will allow non-banking institutions to provide foreign currency exchange services in the city on a trial basis, the State Administration of Foreign Exchange said Wednesday on its Website.

Pudong New Area will be the trial basis to run the service.

Beijing was also given approval to begin trials of this policy, the regulator said.

Qualified non-financial players can run two-way (yuan to forex, forex to yuan) services to domestic individuals within the annual foreign exchange quota of US$50,000.

Overseas individuals can sell up to US$500 worth of yuan a day. The limit will rise to US$1,000 if they have pass beyond the country's customs checkpoints at airports and other border controls.

The industry has long-waited for the move, which the regulator said will "meet increasing demand for foreign exchange services."

The move is also in line with the central bank's trial to start small sum foreign exchange in Pudong. The Shanghai headquarters of the People's Bank of China said in early 2006 that it will start trial small sum foreign currency exchange in Pudong as the country quickens steps to open its forex market.

Easy Exchange, a currency exchange company under Shanghai Lujiazui Development (Group) Co, has already set up outlets to provide forex-to-yuan services on a trial basis.

China is taking efforts to loosen control of its forex regime. Authorities more than doubled individual's forex quota from US$20,000 to US$50,000 in February 2007, to siphon mounting forex reserves. The previous quota was introduced in May 2006.