Chinese banks given yuan exchange freedom

Photo taken on Jan 16, 2013, shows the office building of Chinas State Administration of Foreign Exchange (SAFE) in Beijing.[Photo / IC]

BEIJING - China's State Administration of Foreign Exchange (SAFE) announced on Wednesday that it will allow banks to set their own exchange rates for?yuan against the US dollar with clients, a further step in the liberalization of?yuan exchange rates.

Banks can set their yuan/dollar exchange rate in their over-the-counter deals with clients on the basis of market demand, the SAFE said in a statement.

The regulation entered effect on Wednesday. Before the new move, the spreads in banks' yuan/dollar buying and selling prices were subject to regulatory controls.

The People's Bank of China widened the spreads to 3 percent from the previous 2 percent in March.