China mulls tax on currency transactions: Bloomberg

China mulls tax on currency transactions: Bloomberg

© Stringer China / Reuters

The rate of the so-called Tobin tax could be kept at zero initially while the new rule awaits central government approval, Bloomberg reported.

The tax is not designed to disrupt hedging and other foreign-exchange transactions undertaken by companies, Bloomberg cited the sources as saying, and added that it is unclear when the tax would be rolled out. (

The central bank's reported move came as recent declines in China's foreign exchange reserves and increased capital outflows have rattled global markets.

Capital outflows from China have been fueled by concerns about its economic slowdown and expectations of higher U.S. interest rates. That has prompted the central bank to intervene in the currency markets to support the yuan and crack down on forex trading which it suspects to be speculative.

The yuan has weakened about 5 percent against the dollar since last August, while analysts polled by Reuters believe the yuan will fall another 3.5 percent over the next 12 months.

The People's Bank of China didn't immediately respond to a fax and an email from Reuters seeking comment on the report.

(Reporting by Beijing Monitoring Desk and Kevin Yao; Editing by Simon Cameron-Moore)