The rule, according to which trading at all the stock exchanges of the country had to be stopped in China automatically in case of a collapse of the indices, has been terminated today. The corresponding decision was taken by the Commission on regulation of the Chinese security market after the stock exchanges in China stopped trading twice due to a sharp collapse during the first week in January.
"Now the effect of the mechanism is more negative than positive. In this regard, the Commission for Securities' Regulation of China decided to suspend the operation of the mechanism of automatic suspension of trading in order to maintain stability on the stock market,’’ RIA Novosti cites the statement of the official representative of the commission Deng Ke.
The mechanism was used on January 4th for the first time, when trading at the country's largest Shanghai Stock Exchange was suspended for 15 minutes, according to the mechanism, after the fall of the country's key stock index Shanghai Composite by 5%. It was assumed that this would allow to avoid further decline, but after the opening of trading shares they began to decline again, falling by almost 7%, leading to a final stop.
Trading was terminated for a second time this morning for a similar scenario: at the opening of trading the Shanghai Composite Index fell by more than 5%. It led to a technical break at the stock exchange. After resumption of trading, the decline reached the level of 7.32% (3,115.89 points), after which trading stopped again.
Referring to a source familiar with the situation, Bloomberg reports that the decision to terminate the rule was made at an emergency meeting of the committee, which discussed measures to restore the Chinese stock market.
This step shows that the Chinese authorities are considering the possibility of changing the current system, RBC reports. Informed sources confirm that the People's Bank of China is looking for new solutions in order to prevent high exchange rate volatility, and intends to continue to intervene in the foreign exchange market.
It became clear today that the total volume of China's foreign exchange reserves fell for the last record $107.9 billion to $3.330 trillion. The corresponding message was published on the official account of the People's Bank of China on Weibo.
In November, the total foreign exchange of the currency reserves declined by $87.2 billion to $3.438 trillion. The volume of China's reserve position at the IMF fell from $4.596 billion to $4.547 billion, RIA Novosti reports.
Today the exchange rate of the yuan to the dollar fell by 0.51%, reaching the level of 6.5646 yuan. It is the lowest level since August last year, when the Central Bank of China drastically weakened its currency against the US dollar.
