Foreign exchange purchase and sale

Settlement and sale of foreign exchange is a general term for both settlement and sale of foreign exchange. Foreign exchange settlement refers to the process in which all domestic enterprises, institutions, government agencies, and social organizations (excluding foreign-invested enterprises) obtain foreign exchange income. According to the regulations of the State Administration of Foreign Exchange, they must promptly transfer the foreign exchange income within the prescribed scope back to China and sell it all to designated foreign exchange banks at the listed exchange rate. There are various methods of foreign exchange settlement, such as mandatory settlement, voluntary settlement, and limited settlement. Foreign exchange sales refer to domestic enterprises, institutions, social organizations, and individuals who need foreign exchange for external payments. They can purchase the required foreign exchange in RMB from designated foreign exchange banks in accordance with the national foreign exchange management regulations, holding relevant documents and materials. From the perspective of foreign exchange users and individuals, foreign exchange sales are also known as foreign exchange purchases.

brief introduction

English: Exchange settlement. Regular project mandatoryForeign exchange settlement and sale systemIt was an important part of China's foreign exchange management system reform in 1994oneThe system requires that foreign exchange accounts, except for those designated by the state, can be retained Both enterprises and individuals must sell foreign exchange to designated foreign exchange banks, and designated foreign exchange banks must sell foreign exchange in the market beyond the approved position limit of the State Administration of Foreign Exchange. central bankoneAs market participants, they usually buy foreign exchange to accumulate national foreign exchange reserves. compelForeign exchange settlement and sale systemAdapted to the needs of foreign exchange management at that time. It has played a positive role in promoting the continuous improvement of foreign exchange balance, increasing foreign exchange reserves, and maintaining the long-term basic stability of the RMB exchange rate. With the deepening of foreign exchange system reform, multiple adjustments have been made to foreign exchange management policies to meet the needs of the economic situation.

Foreign exchange settlement and sale system

Compared to around 1994. The current economic and foreign exchange situation in China has undergone significant changes compelForeign exchange settlement and sale systemFaced with numerous reform pressures. The income and expenditure situation of China's PI -} E has been improvedoneChange the weakness of the past and achieve double surplus for consecutive years. From 2001 to 2005, China's current account and capital financial account respectively achieved a surplus of 328.2 billion US dollars and 293.4 billion US dollars It is mandatory.Foreign exchange settlement and sale system21.2 times and 7.7 times before implementation from 1989 to 1993. During the same period, China's foreign direct investment reached 299.2 billion US dollars, which is seven times the amount from 1989 to 1993. At the end of 2006, China's official foreign exchange reserves reached 1066.3 billion US dollars, which was 50 times that of the end of 1993. The appreciation of the Chinese yuan has been significant. Since 1994, the yuan has appreciated by 11.4%, 18.6%, and 12.1% against the US dollar, Japanese yen, and Hong Kong dollar, respectively.

Adjustment of foreign exchange management system

compelForeign exchange settlement and sale systemNot conducive to entryoneBuilding a loose foreign exchange environment is not conducive to truly reflecting the level of the RMB exchange rate and the domestic and foreign exchange supply and demand relationship Not conducive to enhancing the awareness of exchange rate risk prevention among Chinese enterprises, not conducive to equal competition between Sino foreign joint ventures, and not conducive to mobilizing the enthusiasm of Chinese and foreign enterprises to earn and use foreign exchange. With the deepening of foreign exchange system reform, in order to meet the needs of the economic situation In recent years, the country has made multiple adjustments to its foreign exchange management policies. Mainly includes:

(one)Enterprise aspect

In September 1997, it was allowed to comply withoneChinese funded enterprises with certain conditions shall open foreign exchange settlement accounts Retain current account foreign exchange income within the limit of 15% of foreign exchange income. In November 2001, the standards for opening foreign exchange settlement accounts for Chinese enterprises were relaxed. And increase the retention limit of foreign exchange income for Chinese funded enterprises to 25%. In October 2002, the conditions for Chinese enterprises to open foreign exchange accounts under current account were lifted: allowing enterprises to set account limits based on 20% of their previous year's foreign exchange income under current account. In 2004, the proportion of foreign exchange that domestic institutions could retain in their current account foreign exchange accounts was increased from 20% to 30% or 50%. In 2005, the deadline for over limit foreign exchange settlement was extended from 10 working days to 90 days Expand the scope of enterprises whose current account foreign exchange account limit is determined based on 100% of actual foreign exchange income, and increase the proportion of domestic institutions' current account foreign exchange accounts retaining cash from 30% or 50% to the current 50% or 80%.

(two)Personal aspect of residents

In 2005 Raise the guidance limit for self funded overseas students to purchase foreign exchange, from an equivalent of 20000 US dollars per person per year to tuition fees being paid according to the annual tuition standards listed on the admission letter or tuition certificate of the overseas school. The guidance limit for living expenses is an equivalent of 20000 US dollars per person per year. The limit for personal foreign exchange purchases has also been increased from the original 3000 or 5000 US dollars to 5000 or 8000 US dollars; There are no restrictions on purchasing foreign exchange when repaying personal overdrafts for current account consumption overseas. At the end of 2006 The annual total amount of foreign exchange purchased by domestic individuals has significantly increased from 20000 US dollars to 50000 US dollars; Annual total amount management has also been implemented for domestic and overseas individuals in foreign exchange settlement, changing the previous practice of "lenient entry and strict exit"; The management mode. This reflects the principle of balanced management of capital inflows and outflows.

(three)In terms of financial institutions

In 2006, the management measures for bank foreign exchange settlement and sales positions were adjusted, and comprehensive foreign exchange settlement and sales position management was implemented.Foreign exchange settlement and sale systemThis reform will connect the previously fragmented foreign exchange trading positions, weekly turnover positions for foreign exchange settlement and sales, and self settlement and sales positions, which will help enhance banks' ability toforeign exchange marketAbility to operate and space for foreign exchange management. Furthermore, it enhances the resilience of China's foreign exchange market. After increasing the weekly foreign exchange turnover position, designated foreign exchange banks will share the burden of the central bank's foreign exchange absorption, which will help slow down the growth rate of China's foreign exchange reserves and reduce the pressure from foreign countries to continue appreciating the renminbi.

Prominent issues that exist

The adjustment of China's foreign exchange management policyoneTo a certain extent, it meets the foreign exchange needs of enterprises, especially the limit of importsoneThe relaxation of regulations has expanded the autonomy of enterprises in using foreign exchange. Reduced the cost of foreign exchange for enterprises. However, as these policy adjustments are mainly gradual reforms carried out within the original framework, they cannot meet the needs of all parties in foreign exchange management and are mandatoryForeign exchange settlement and sale systemThe problems caused have not been fundamentally resolved. compelForeign exchange settlement and sale systemExisting issues:

Increased difficulty for central banks to implement independent monetary policies

Under coercionForeign exchange settlement and sale systemAs a passive buyer, the central bank needs to continuously purchase foreign exchange sold by commercial banks. The sustained growth of official foreign exchange reserves It also means the continuous release of the central bank's base currency. To prevent the problem of excess liquidity and inflationary pressure caused by the continuous release of base currency The central bank needs to continuously withdraw funds through the open market, which greatly limits the independence of its monetary policy. In recent consecutive years China's newly added foreign exchange reserves are several times greater than the newly added base currency injection Exactly explainedoneA question: To offset the excessive currency injection caused by the sharp increase in foreign exchange reserves The central bank has to passively adopt significant hedging measures to reduce monetary liquidity.

Leading to a sharp increase in China's foreign exchange reserves

compelForeign exchange settlement and sale systemDirectly leading to a sharp increase in China's foreign exchange reserves. The structural, risk, management, and operational issues of foreign exchange reserves caused by high reserves cannot be ignored. Moreover, the sharp increase in foreign exchange reserves It reflects the imbalance of China's international trade and international balance of payments in recent years. China has become a target of international trade disputes and frictions.

Not conducive to the formation of the real exchange rate of RMB

The rationality of exchange rates depends on the authenticity of foreign exchange supply and demand willingness. Under coercionForeign exchange settlement and sale systemThe settlement of foreign exchange is mandatory, while the sale of foreign exchange is conditional, and there is a distortion in the supply and demand relationship of foreign exchange in the retail market. The interbank foreign exchange market is actually a flat replenishment market for designated interbank foreign exchange positions, and does not constitute a wholesale market that reflects the real supply and demand of foreign exchange. The RMB exchange rate formed on this basis is difficult to reflect the true supply and demand of the foreign exchange market.

Increased the operating costs of the enterprise

Currently The limit of the enterprise's foreign exchange settlement account is 50% or 80% of the previous year's current account collection, and any excess must be settled, which makes it impossible for the enterprise to independently operate its own foreign exchange according to market expectations. And can only be sold to designated foreign exchange banks; When foreign exchange is needed, it is also necessary to purchase foreign exchange from banksIncreased the operating costs of the enterpriseIt is also not conducive to the formation of foreign exchange risk awareness in enterprises. At the same time Due to the lack of sufficient foreign exchange control, enterprises are unable to carry out hedging, foreign exchange futures, options and other operations to avoid risks and increase returns based on changes in the financial market. this isoneTo some extent, it weakens the capital operation capability of the enterprise Restricting the hands and feet of enterprises participating in market competition.

The direction and mode of reform

On March 27, 2006, the Central Bank of Russia announced that the forced sale of foreign exchange earnings by Russian export enterprises would be reduced to zero. This move means that Russia will stop implementing years of coercionForeign exchange settlement and sale systemSignificant progress has been made in relaxing foreign exchange controlsoneThis has attracted great attention from the global financial community. With good economic and financial support, Russia stopsForeign exchange settlement and sale systemIt has the following positive effects: solving the monetary policy difficulties of the Russian central bank and reducing domestic inflationary pressure; Stable ruble exchange rate; Clearing obstacles for Russia to achieve full convertibility of the ruble in 2007. compelForeign exchange settlement and sale systemoneThis is an important reason why China is regarded as a foreign exchange control country internationally. With the continuous increase of the reserve limit for foreign exchange income of Chinese and foreign-funded enterprises, the continuous increase of residents' foreign exchange quota, the continuous relaxation of foreign exchange conditions, and the expansion of bank foreign exchange settlement and sales positions, it is mandatory toForeign exchange settlement and sale systemThe foundation has been severely shaken. Considering the significant changes in China's foreign exchange balance and forcedForeign exchange settlement and sale systemChina should steadfastly continue to implement the various drawbacks brought about by itForeign exchange settlement and sale systemReform.Foreign exchange settlement and sale systemThe fundamental purpose of the reform is to solve the current difficulties faced by the central bank in policy operations, lay a good foundation for the formation mechanism of the RMB exchange rate, and transform the situation of "hiding foreign exchange in the country"; To 'hide and gather with the people';. The basic idea of the reform is to ultimately achieve full willingness to settle and sell foreign exchange, and to reform the current exchange rate formation mechanism in conjunction with the RMB capital account convertibility process, changing the foreign exchange trading markettwoLevel architecture, add/JM '; I - Foreign exchange trading entities and foreign exchange trading varieties, truly achieving a single transaction determined by market supply and demandoneA managed floating exchange rate system. But the current situation in China is that due to the huge amount of newly added foreign exchange reserves every year Even if only a complete voluntary settlement and sale system is implemented for incremental foreign exchange reserves, it may still have an impact on the principles of proactivity, controllability, and gradualness emphasized in China's exchange rate mechanism reform, and exchange rate fluctuations will be greater and more frequent. This is clearly something we do not want to see.

asoneAdopting a transitional measure and implementing a proportional settlement and sale system is a better choice. The state designates commercial banksoneIndividual foreign exchange settlement ratio; Commercial banks settle domestic trade and non trade foreign exchange income proportionally based on the exchange settlement ratio announced by the state: all enterprises are allowed to open cash accounts to retain cash Internal and external foreign exchange in the account can be used for import payments, temporary foreign exchange settlements, entering the foreign exchange market, or conducting foreign exchange forward trading, option trading, and other operations to avoid exchange rate risks. The 'proportion' here; It can be flexible and adaptable. The central bank can adjust the amount of foreign exchange reserves, the total amount of foreign exchange expenditures under the current accountoneThe maximum limit of the increase or decrease of the RMB exchange rate within the year and other indicators are related to the "; ratio"; Make adjustments. The lower the settlement ratio, the higher the willingness to settle. The central bank may choose to transition to a zero proportion system at an appropriate time based on comprehensive consideration of the domestic and international economic situation, that is, to implement a fully voluntary settlement and sale system.

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