Chinese banks report net foreign exchange sales drop

World
Europe

Chinese commercial banks recorded a smaller net foreign exchange (forex) settlement deficit in August as cross-border capital flows stayed balanced and stable, the forex regulator said Monday.

Commercial banks bought 141.2 billion US dollars worth of foreign currencies and sold 145 billion US dollars last month, resulting in net sales of 3.8 billion dollars, down 75 percent from July, according to the State Administration of Foreign Exchange (SAFE).

In the first eight months of this year, banks bought 1.04 trillion dollars of foreign currency and sold 1.15 trillion dollars, SAFE said in a statement.

The regulator said forex supply and demand in August has been more balanced than the previous month, while capital inflows from trade and investment have increased.

The willingness for market entities to sell foreign currencies increased while their willingness to buy hit a new low, it said.

In line with the net forex sales data, China's forex reserves rose for the 7th month in a row in August as the yuan gained strength and pressure of massive capital outflow eased, previous data from the central bank showed.

Forex reserves reached 3.092 trillion US dollars by the end of August, increasing 10.8 billion dollars from a month earlier.

It is the first time the reserves have expanded seven months in a row since June 2014.

There had been concerns over capital flowing out of the Chinese market in the second half of 2016 when the economy was facing looming downward pressures and the Chinese yuan was in the middle of a losing streak against the US dollar.

But the Chinese currency made a strong comeback recently, with the central parity rate hitting 6.5419 against the US dollar Monday, strengthening from 6.6744 a month earlier.

With sound economic fundamentals, wider openness and more stabilized market expectations, cross-border capital flows will continue to keep balanced and stable, SAFE said.

Source(s): Xinhua News Agency