The People’s Bank of China has drafted rules for a tax on foreign-exchange transactions, Bloomberg reported, citing unnamed sources. The initial rate of the tax, meant to help curb currency speculation, may be kept at zero to allow time for refining the new levy’s implementation. The sources also claimed that the tax was not designed to disrupt hedging and other foreign-exchange transactions. “These measures can’t guarantee volatility in the market will come down since it’s difficult to identify if currency trading is down to speculation or the genuine need of companies hedging their foreign-exchange exposure,” said Tommy Ong, managing director for treasury and markets at DBS Hong Kong.
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