China considering policy to fend off ‘hot money’

CHINA may deploy a mixture of policies to fend off hot money, an official paper cited a central bank executive as saying at the weekend, amid worries US policies could create unwelcome flows of capital towards China.

Ma Delun, a deputy governor of central bank the People’s Bank of China (PBOC) said such a policy kit would include reserve requirement adjustment, management of foreign exchange positions, and open market operations, expanding on an earlier remark by the PBOC governor.

With the US weakening the dollar with a second round of quantitative easing, worries are mounting much of that cash may end up overseas, putting pressure on countries including China to find ways of fending off unwanted capital inflows.

Ma also said the inflation rate that reached a 25-month high in October was within expectations.