In a move that signifies a liberalisation of China’s foreign exchange regulations, Travelex has been awarded an ‘Authorised Foreign Exchange’ licence by the Chinese government, the first to be awarded to a non-bank institution.
The licence, which was approved by Chinese premier Wen Jia Bao last week, will give Travelex greater freedom in the setting of exchange rates, the number of currencies it can sell and the location of its branches.
Currently, foreign operators are allowed to deal in only 16 currencies as dictated by the Bank of China, are restricted by exchange-rate controls and are not allowed to transact with Chinese nationals.
Travelex, which trades at six of China’s airports, now aims to open shops in Chinese city centres, with plans to double the size of its retail business in China over the coming year. China’s retail foreign exchange market is estimated at $9.7 billion a year.
Ian Meakins, CEO, Travelex says China “is a market that plays a key part in our future growth strategy,” and notes that the company has been working closely with the Chinese government for some months now.
The development comes as China’s foreign exchange regulator, the State Administration of Foreign Exchange (SAFE), announced last Wednesday that it would permit non-financial institutions in Beijing and Shanghai to offer currency exchange services to individuals.
China strictly controls foreign exchange trading, allowing such transactions on a limited basis for travel and business dealings. So far, such exchanges have been limited to banks.
Under a trial programme, Chinese individuals will be able to buy or sell foreign currency in authorised non-financial institutions within an annual quota equivalent of $50,000 per person and a daily limit of $5,000.
Foreign individuals can convert foreign currency into the Chinese yuan under the same annual quota of $50,000 per person. They will be allowed to buy up to $5,000 worth of yuan per day and sell the equivalent of up to $500.
SAFE did not say, however, when the trial programme would begin and it is understood that the move does not signify an easing in China’s stance of clamping down on retail FX speculation.