China’s New Forex Regulations

Due to the significant transformation undergone in the Chinese economy, the State Council of the People’s Republic of China issued the new “Regulations on the Administration of Foreign Exchange of China” effective August 1, 2008. Under these new regulations, more emphasis is placed on the administration of inflow and outflow of foreign exchange.

To facilitate implementation of the aforementioned forex regulations, the State Administration of Foreign Exchange (SAFE) recently issued a supplemental circular, Huifa [2008] No. 60, introducing a new mechanism to track the inflow of foreign exchange through trade account items into China.

1. Legal entities, including wholly foreign-owned enterprises (WFOEs) and representative offices (ROs), that previously only had an RMB Basic Account in China are now required to open a specific Foreign Currency (FCY) Settlement Account for collecting proceeds and the conversion of such forex income into RMB. For entities that only have small or sporadic forex inflow and outflow, forex collections and payments can proceed through the banks’ miscellaneous conversion account on behalf of these entities.

2. Based on dialogue with SAFE and the Industrial and Commercial Bank of China (ICBC), the criteria for small or sporadic forex inflow and outflow are as follows:

The total amount of forex inflow and outflow is less than US$100 per time No more than twice per year

3. The formalities and procedures of opening a special FCY Settlement Account for entities are listed as below:

Approval from SAFE to open an FCY Settlement Account (for RO and branch offices only). Since a bank will not open an FCY Settlement Account without SAFE’s approval, entities need to prepare the following documents for SAFE:

Application letter
Business license (original and copy)
Forex IC card
Enterprise Code Certificate (original and copy)
Other documents required by SAFE Documents are to be given to the bank only after SAFE approval. To inquire about the need for documentation for the bank, please inquire with the official in-charge for the designated bank.

Please note: Based on our discussions with SAFE officials, wholly foreign-owned enterprises do not need to get prior approval from SAFE. The foreign company can directly submit an application to the designated bank to open an FCY Settlement Account.

4. Based on unofficial talks with ICBC officials, a new internal control mechanism system will be firstly established between the SAFE, banks and other Chinese government authorities such as the Ministry of Commerce, the State Administration of Industry and Commerce, tax and customs by in the coming months. The entities will be required to open FCY Settlement Account very soon after this system is in service. It is expected that more detailed implementation guidelines or circulars may be issued by SAFE and designated banks to cater for actual practices next month.

To ensure that incoming foreign currency is deposited in the correct bank account and to avoid an extended wait at SAFE and the bank when opening up an FCY Settlement Account after the deadline is announced, we suggest that all WFOEs and ROs prepare and apply to SAFE and bank now.

For detailed information, contact SAFE and your corporate bank. For assistance with these procedures, please contact info@dezshira.com or visit www.dezshira.com.

Forex - China's Hike in the Reserve Requirement Ratio Hurts Commodity Currencies

The USD was mildly weaker against the majors, with the commodity currency seeing the largest appreciation after yesterday's fall. While not a complete surprise, China's 50bp hike in banks reserve ratio put risk on a back footing, highlighting how sensitive market participants are to any tightening. The move is expected to freeze roughly CNY270bn at Chinese banks. Given China's massive demand for commodities, it was logical that a selling in the commodity currencies (AUD hardest hit) would be seen. It seems to us that the move yesterday was merely an effort to prevent the speculative bubble by reeling in excessive bank lending, not an outright move to tighten policy. The negative sentiment trickled over in US equity markets, which closed broadly lower, and Asian regional indexes are falling, led by Shanghai, down -3.09% at the time of writing. The unwind of risk correlated trades, combined with lower US yield and long position liquidation, pushed the USDJPY lower yesterday. However, in the early European session, risk appetite seemed to be creeping back into the markets, as the AUDUSD started the day around 0.9180, before a steady climb to 0.9245. Carry trades have also seen decent demand, supported by VIX dropping to 18.25, with the EURJPY rallying to 132.42, GBPJPY to 148.20 and NZDJPY, helped by a strong worker confidence and ANZ commodity price index, crawls to 0.7422. In other news, ultra hawk Philly Fed Plosser stated the US economy was recovering from recession, with moderate growth and low inflation. He continued in the expected fashion, saying the Fed will need to increase interest rates as economy continues to recover and must hike rates before the jobless levels are acceptable. The comments gave the USD a slight boost, which quickly faded but illustrated a noticeable shift in Fed speakers tone since the New Year, from dovish to slightly hawkish. The Greek situation continues to linger and hinder the EUR movement. Yesterday, the European Commission, in their harshest report yet, explained that Greece's public finances contained several persistent irregularities and "including unreliability of data, non-respect of accounting rules, and timing of the notifications"...The report wrapped up saying that "unless the institutional weaknesses uncovered during the investigation of the irregularities underlying the 2009 notifications of data are corrected and proper checks and balances introduced, the reliability of Greek deficit and debt data will remain in question". Currently, the cost of insuring against debt default in European nations is higher than for top investment grade corporate for the first time. The EURCHF had some interesting price action at the start of the European session, accompanied with rumors of local names buying. We will be watching carefully, as we don't believe the SNB is done with physical intervention. With today's light economic calendar, we expect FX markets to be range bound with little reason to break fx out of this funk. And finally, in regards to the Feds reported $45bn windfall profit from 2009 operations,

Basic Facts on Commercial Development Finance

Developers or investors can get development finance UK from specialists. They can be an individual, a partnership, limited companies, trusts, and other organizations or less known business entity.

When you are looking for development finance UK, you are relying on the expertise and sources of the development finance specialist. At this time, you will be working hand in hand with someone who can not only provide you with the needed finance, but can also ensure that the project will be at its best shape. This could be of your advantage because your resources and connection will expand. Development finance UK can extend to commercial development finance. Companies for development finance UK usually have persons in the organization who are specialist on commercial development. The choices you have for your commercial development finance is for property refurbishment, property conversion, new building project and purchase of land.

In commercial development, you can actually get 100% development finance, buy to let mortgage or other financing schemes. Each of these financing options is provided depending on your worthiness, background, and possible outcome of the project at hand. Generally, commercial development finance is secured with the property or the land that will be developed. The security depends on the type of financing you applied whether for 100% development finance or other types of financing.

You would need to secure the right proposal detailing the project to be able to let the company for development finance UK understand where the finance will be used for and what outcome is expected from the project. Once they see that the proposal is based on solid, realistic and viable information on the output of the project, they will most likely provide you the needed funds.

gold trading

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Normally, this wouldn’t rate too high for us — lots of people have ideas about how to use World of Warcraft, and many of them never actually come about. But then again, this is in the Wall Street Journal of all places, so we’ll give it a look. If you’re on Twitter, you’ve probably heard about what’s going on in Iran right now — there was an election, the “official” results given were judged as rigged by many involved, and the government seems to be cracking down on both news media and citizen journalism, as well as protesting citizens, to very sad results. How to make more cheap wow gold ?How does World of Warcraft fit in to all of this? Andrew Lavallee of the WSJ’s Digits blog points to this report by Craig Labovitz, which talks about how Internet traffic has been filtered out of the country around the election. At the very end of his analysis, Labovitz points out that channels for videogames, including both Xbox Live and World of Warcraft, have shown very little government manipulation. That suggests that if the government in Iran does continue to shut down certain channels, citizens there might be forced to spread the news through any virtual route they can, including possibly Azeroth.

Why Invest in Commodities?

Most of us are quite comfortable with investing in cash deposits, government bonds, and stocks for conservative risk-averse investors. We hear these products discussed widely in the financial media. But rarely do we hear commodities discussed as an investment alternative. After all, what do commodities have to offer that stocks haven’t already provided?
Here are reasons why commodities can be a good investment:

- By diversifying your portfolio, the risk can be reduced, especially during recessionary periods such as bear markets where stocks tend to decline and lose value. Commodities tend to rise and this would counter the loss of portfolio value.

- Commodities trend better than stocks, not only on individual or also stock sectors and stock indexes. As such they are a better long-term investment vehicle. Trends tend to last short term such as a few months to a few years. When the trend begins, it is very unlikely there will be sharp reversals or unpleasant surprise.

- Commodity markets have large liquidity. Not all stocks are liquid even if they look very attractive earnings-wise, but exiting can be a painful process. In commodities, all commodities traded are highly liquid.

- Commodities have been trading for more than a century. More than 90% of stocks come and go. None are changed any way so there is more reliability in back-testing (review your strategy on past historical data) than others instruments such as futures and stocks where premiums change from one expiring contract to a new one, or stock-splits.

- At tax time, profits from commodities pay lower taxes than profits from stocks. In addition, there is no need to itemize all the transactions line by line where all stock transactions must be itemized. Long term or short term capital gains do not apply in commodities.

- Due to leverage, the gains can be spectacular, possibly many multiples of the original equity. For a small sum in the account, it is possible to more than double the account equity in a very short period of time.

- If the financial objective of the person is aggressive where he has high tolerance for risk, then commodities may fit is personal tolerance for risk. With a small equity, he can use for high-growth part of the entire diversified portfolio.

Here are some reasons against the investing in commodities:

- Daily Price Limit can prevent the investor from exiting a position if prices have reaches the day’s maximum price rise or decline allowed. This is especially difficult when his position is in a loss. Many times, margin calls will automatically exit the position. However, the account can be in the negative where the investor must fund additional money to the account to get back in black.

- There is lack of research materials covered in the media or in print compared to those covering stocks. The most popular financial books mainly use stocks as examples. Most brokerages and investment banks whose analysts cover industries and stocks. Investors like to see easily available and up-to-the-minute information which can be made available but not in a wide variety.

- The leverage is high, so small losses can make a big impact on the equity. This is a common scenario where the uninitiated and unprepared will see the account being wiped out.

- Future contracts constantly expire. If it’s a long-term holding, contracts must be managed properly changing to forward contracts. This can be tricky because premiums change from one forward contract to the next. Acute attention must be given in doing so.
If the investor is risk-averse in which he is content with small return year to year, then commodities might not be the right investment.

This list should not be considered final for any person to decide if he or she should trade commodities. There are many other factors and priorities, such as financial situation, time and preparation of each person to commit before deciding. To effectively profit from any market, due diligence and preparedness is the method to obtain the desired objectives. Weigh each pro and con carefully and verify the arguments for oneself before committing hard-earned money to waste.

By: Larry Swing