Exchange Business Keeps a Low Profile

Setting up foreign exchange outlets was supposed to be a breakthrough in Pudong New Area's expansive reform last year.

But when several exchange companies and outlets opened one after the other over the last few months, they all opened quietly.

Officials from the Shanghai branch of the State Administration of Foreign Exchange (SAFE) did not attend the openings. When contacted by China Daily yesterday, SAFE's Shanghai officials said they could not talk about the issue.

It was reported that three local exchange companies were given licenses to operate in the city.

Easy Exchange, a joint venture between Lujiazui Group Co and listed Lujiazui Co Ltd, is planning nine outlets in Shanghai. Three are already in service in Pudong's Super Brand Mall, Pudong International Airport and Yuanshen Road.

ICE, a joint venture between Zhangjiang Group and the International Currency Exchange (ICE), has also opened two outlets.

Travelex, an international company, was the third to get approval, but it is not known whether it intends to run as a solely owned company or as a joint venture, China Securities News reported.

Currently the outlets can only exchange nine foreign currencies into yuan, not vice versa. The maximum single deal is capped at US$5,000.

Both Easy Exchange and ICE outlets are only doing agency business for Bank of China, the country's foreign currency bank. "We will handle the business independently after we get approval from SAFE," said an official from Lujiazui Group.

The low-profile operation of the exchange companies is reportedly down to uncertainty as to whether they will be classified as financial institutions or ordinary businesses, thereby placing them under different regimes.

China still exercises control over its foreign exchange, despite its foreign currency reserve being in excess of US$1 trillion at the end of last year.

(China Daily March 14, 2007)