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China tightens capital controls amid yuan's continuing slide

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China is clamping down on currency exchange.   © Reuters

SHANGHAI -- China has toughened restrictions on capital flows to prevent a vicious cycle forming between a weakening yuan and capital flight.

The State Administration of Foreign Exchange has introduced new capital measures in areas such as Shanghai and Guangzhou since the beginning of autumn, asking foreign and regional banks to cap the amount of foreign currency they will sell to customers during 2016.

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