China has scrapped a restriction on cross-border capital movement imposed in January, in what is believed to be the first concrete move to loosen capital controls since authorities began imposing curbs designed to shield the renminbi from downward pressure last year.
The People’s Bank of China has told financial institutions that they are no longer required to maintain a balance of inflows and outflows when processing cross-border renminbi payments, according to people familiar with the matter. The latest instructions reverse January’s oral guidance instructing banks to maintain either a net balance or net inflows of renminbi.
The loosening measure — the first known step towards deregulating outbound money flows since outflow pressure began in late 2014 — suggests the authorities are increasingly confident they have weathered the country’s worst-ever bout of capital outflow. The US dollar has weakened against a range of global currencies in recent months, lessening pressure on the renminbi.