Chinese banks post net forex buy for second straight month

Xinhua
Chinese banks recorded the second straight month of net foreign exchange purchase in October as cross-border capital flows stabilized, official data showed yesterday.
Xinhua

Chinese banks recorded the second straight month of net foreign exchange purchase in October as cross-border capital flows stabilized, official data showed yesterday.

Chinese lenders bought US$128.9 billion worth of foreign currency last month and sold US$126.1 billion, resulting in a net purchase of US$2.8 billion, the State Administration of Foreign Exchange said in a statement.

The surplus widened from US$300 million of net purchase in September, when banks bought more forex than they sold for the first time in more than two years.

In the first 10 months, Chinese banks bought US$1.33 trillion worth of foreign currency and sold US$1.44 trillion, resulting in a net sales of US$110.1 billion, the data showed.

SAFE said the country’s cross-border fund flows remained basically balanced in October, with market entities acting more rationally.

The willingness of individuals to buy foreign currencies fell in October from a seasonal high during the third quarter, and was sharply down compared with a year ago, it said.

Capital inflows through goods trade, foreign investments, and cross-border financing activities maintained upward momentum.

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

In January, China’s forex reserves had plunged below US$3 trillion, but as the economy stands on a firmer footing and the yuan continues to stabilize, the stockpile has increased steadily since February.

Recent data showed that China’s forex reserves rose for the ninth month in a row in October to US$3.109 trillion, up US$703 million from a month earlier.

As China restructures its economy to push sustainable growth, cross-border capital flows will continue to be balanced and stable in the medium and long term, SAFE said.  



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