China To Remove Forex Deposit Rates Cap In Shanghai

(RTTNews) - China's central bank will permit banks in Shanghai, beyond the city's free-trade zone, to set foreign-currency deposit rates on small accounts as the government endeavors to bring healthy competition in the banking system.

The People's Bank of China will start with institutional deposit accounts tomorrow, and individual accounts will be added on at a later stage.

The central bank had abolished ceiling on foreign currency interest rates on March 1 for smaller deposits in the free trade zone in Shanghai. The free trade zone was established last September.

The State Administration of Foreign Exchange on Wednesday said it will increase foreign exchange derivative products to facilitate foreign trade. Further, it vowed to promote and regulate the development of the forex derivative market.

A survey from the PBoC revealed this week that confidence among bankers and entrepreneurs weakened in the second quarter.

The economic confidence index among entrepreneurs fell by 2.1 percentage points to 64.9 in the three months to June. Bankers' economic sentiment dropped by 13.9 percentage points to 53.7.

Overall, the surveys point to relative weakness in the economy this quarter but nothing too dramatic, Mark Williams, chief Asia economist at Capital Economics said.

The survey also revealed that there was a decrease in proportion of households expecting property prices to increase over the third quarter.