Inflows boost record net forex buying
Source: Bloomberg News |
March 6, 2013, Wednesday
|
Print Edition
Print Edition
CHINA'S central bank and financial institutions bought a record net 683.7 billion yuan (US$110 billion) of foreign currency in January, a possible signal of large inflows of funds amid optimism growth is rebounding.
Yuan positions accumulated from foreign-exchange purchases rose to 26.5 trillion yuan from December, data published by the People's Bank of China showed yesterday. In percentage terms, the 2.6 percent gain from the previous month was the biggest since April 2008. Net buying totaled 134.6 billion yuan in December after net sales of 73.6 billion yuan in November.
The foreign-currency purchases by Chinese financial institutions may mean their customers were buying yuan, reflecting January's trade surplus and optimism for the country's growth outlook following fourth-quarter economic data, said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.
"Expectations of appreciation played a key role in the inflows," Kowalczyk said. The "permanent nature" of an infusion of funds means there's no need to reduce banks' reserve requirements this year, according to him.
Asked if the January yuan positions indicate so-called hot-money inflows, PBOC Governor Zhou Xiaochuan said in Beijing yesterday that "it's hard to explain in a few words."
Monetary easing in major economies including the US and Japan "may make global capital flows more volatile, push up commodity prices and generate a greater spillover effect on emerging economies," the PBOC said last month.
Premier Wen Jiabao yesterday set a target for M2 money-supply growth of 13 percent this year, which would be the lowest increase since 2000.
Yuan positions accumulated from foreign-exchange purchases rose to 26.5 trillion yuan from December, data published by the People's Bank of China showed yesterday. In percentage terms, the 2.6 percent gain from the previous month was the biggest since April 2008. Net buying totaled 134.6 billion yuan in December after net sales of 73.6 billion yuan in November.
The foreign-currency purchases by Chinese financial institutions may mean their customers were buying yuan, reflecting January's trade surplus and optimism for the country's growth outlook following fourth-quarter economic data, said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.
"Expectations of appreciation played a key role in the inflows," Kowalczyk said. The "permanent nature" of an infusion of funds means there's no need to reduce banks' reserve requirements this year, according to him.
Asked if the January yuan positions indicate so-called hot-money inflows, PBOC Governor Zhou Xiaochuan said in Beijing yesterday that "it's hard to explain in a few words."
Monetary easing in major economies including the US and Japan "may make global capital flows more volatile, push up commodity prices and generate a greater spillover effect on emerging economies," the PBOC said last month.
Premier Wen Jiabao yesterday set a target for M2 money-supply growth of 13 percent this year, which would be the lowest increase since 2000.
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