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BEIJING- China on Wednesday granted fresh quotas worth $3.5 billion under a key outbound investment scheme, sending a signal that Beijing has more tools available to tame the yuan's rapid rise.
China's foreign exchange watchdog regularly discloses quotas under the Qualified Domestic Institutional Investor (QDII) scheme at the end of each month.
But in an unusual mid-month disclosure, the State Administration of Foreign Exchange (SAFE) said QDII quotas totalled $157.5 billion at the end of Dec. 15, compared with $154 billion at the end of November.
The quotas increased after five institutions won fresh approvals on Wednesday, data shows. More QDII quotas increases demand for the dollar and eases pressure on the yuan to rise.
Part of efforts to slow rapid appreciation of the yuan, which hurts Chinese exports, China's central bank had announced a hike in the foreign exchange reserve requirement ratio (RRR), which takes effect on Wednesday.
The People's Bank of China also purchased a net 35.4 billion yuan ($5.56 billion) worth of foreign exchange in November - the most since October 2015 according to Reuters calculation - in a move that helps curb yuan's rise.
Earlier this week, Guan Tao, global chief economist at BOC International and a former senior official at SAFE, said that avoiding excess yuan appreciation should be one of China's priorities in managing market expectations.
The institutions that received new quotas on Wednesday include United Overseas Bank (China) Ltd, China Southern Asset Management Co, China Asset Management Co, E Fund Management Co and Huatai-PinBridge Investments. ($1 = 6.3650 Chinese yuan renminbi)
(Reporting by Beijing newsroom, Editing by Louise Heavens) ((gao.liangping@thomsonreuters.com;))