The official Shanghai Securities News quoted unnamed sources as saying the State Administration of Foreign Exchange (SAFE) was seeking banks' comments on the draft rules, which would allow conversions without a complicated regulatory approval process. China has drafted rules making it easier for banks to convert foreign currency holdings into other foreign currencies, official media reported on Friday, a move which some dealers said might eventually lead to a cut in U.S. dollar holdings at Chinese banks.
Banks can already trade foreign currencies in China's spot foreign exchange market without regulatory approval. But current rules impose strict restrictions, including an approval requirement, on conversion of banks' foreign exchange capital bases from one currency to another.
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