Shanghai citizens dumping US dollars

 

Chinanews, May 25 - Affected by the recent anticipated adjustments in the RMB, quite a fewShanghainese residents lean towards getting rid of the U.S. dollars they own. In April this year,many Shanghainese banks have experienced the pressure of rising volume of foreign currencytransactions. Many banks reflected that near end of April and beginning of May, residents' forextransactions amounts were up 30% or more over last year. Certain individual banks even reportedsingle day currency transactions amounting to several hundred thousand U.S. dollars.Because individual forex account holders flock to dumping the greenback, banks have experienced theever more serious issue of losing their foreign currency deposits. The Shanghai branch of thePeople's Bank of China reveals in its latest currency lending statistics that at the end of April,the entire city's Chinese financial institutions have lost a total of US million in their varioustypes of foreign currency balances, with savings deposit accounts losing US million.Many of Shanghai's banks active in forex businesses reflected that based on considerations of forexrisks, long-term forward currency transactions have been very active, with volume rising by themonth. In particular, forward transactions longer than 3 months have been increasing theirproportion of total forward deals.Financial experts point out that concentrated and larger-scale forex transactions enable total forexvolume to grow rapidly and if the Yuan were to be re-valued, banks would face the risks of losingmoney.Copyright© 2004 Chinanews.com. All rights reserved.