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China's cabinet has named Pan Gongsheng, a deputy governor of the country's central bank, as its new top foreign exchange regulator to manage the country's currency reserves and steer yuan reforms. Pan will replace Yi Gang as head of China's State Administration of Foreign Exchange (SAFE), the cabinet said on Tuesday. Chinese business magazine Caixin first reported the news last month.

Analysts don't expect the appointment will have a significant impact on China's foreign exchange policy, which is overseen by the central bank. SAFE is officially an arm of the People's Bank of China. His appointment comes as authorities struggle to stem capital outflows - fanned partly by fears of China's economic slowdown - that have put pressure on the yuan.

"Pan's appointment shouldn't have too much of an impact because SAFE is more a management body rather than a decision-making body," said Zhou Hao, senior emerging markets economist for Asia at Commerzbank AG, adding SAFE's purview is focused on managing capital inflows and outflows, selling and buying FX, bank regulation and management of FX reserves. "The power to make decisions is much more in the hands of the People's Bank of China or even higher organisations." Unlike Western central banks, the PBOC does not have the final word on adjusting interest rates or the value of the yuan.

Copyright Reuters, 2016


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