China's State Council said that the government will announce the details of a plan to allow full convertibility of yuan as part of the sweeping economic reforms to be implemented this year.

A meeting of the State Council, led by Premier Li Keqiang, put forward a set of proposals to loosen government control over the exchange rate and the monetary policy on Monday. The yuan capital-account convertibility plan will also facilitate overseas investment by individuals, the Cabinet said in a statement.

The latest measures also envisage more focus on improving the quality of urbanization, further development of modern agricultural techniques as well as establishment of an open, transparent and comprehensive budget.

Other reform proposals included improving the risk control measures for local government debt, expanding the scope of value-added tax on companies and stepping up reforms of household registration system.

However, the State Council statement did not gave details of its yuan convertibility plan. The currency hit a record high last Thursday despite concerns about lingering weakness in the economy.

Following the gain in the currency, China's State Administration of Foreign Exchange, or SAFE, said Sunday that it will tighten the scrutiny of forex positions of banks as well as export and import enterprises.

After the SAFE announcement of new rules on yuan, the currency fell to a ten-day low against the dollar on Monday.

Speculations are rife that China will widen the yuan trading band in the near future, allowing the currency to appreciate faster. The yuan is currently allowed to rise or fall by 1 percent in either direction from a level fixed against the dollar each day by the People's Bank Of China.

RTTNews