Chinese banks given RMB exchange freedom

China's State Administration of Foreign Exchange (SAFE) announced on Wednesday that it will allow banks to set their own exchange rates for the renminbi (RMB) against the U.S. dollar with clients, a further step in the liberalization of RMB exchange rates.

Banks can set their RMB/dollar exchange rate in their over-the-counter deals with clients on the basis of market demand, the SAFE said in a statement.

The regulation entered effect on Wednesday. Before the new move, the spreads in banks' RMB/dollar buying and selling prices were subject to regulatory controls.

The People's Bank of China (PBoC) widened the spreads to 3 percent from the previous 2 percent in March.