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More foreign currencies sold
By Feng Jianmin |
September 19, 2012, Wednesday
|
Print Edition
Print Edition
BANKS in China sold more foreign currencies in August than July, indicating an acceleration in net outflow of foreign capital last month amid a weak economic outlook, central bank data showed yesterday.
The yuan funds stemming from purchases of foreign currencies fell by 17.4 billion yuan last month from July to 25.6 trillion yuan, the People's Bank of China said.
It was the third monthly decline this year, and was faster than a net sales of 3.82 billion yuan in July.
"The size of decline is quite surprising," said Zhou Hao, an economist with ANZ Bank. "It indicated an apparent capital outflow from China due to the weak economic situation. Multinational companies are also withdrawing their accumulated profits from China to shore up their liquidity overseas."
The outflow occurred as the yuan weakened against the US dollar in the past two months, as its exchange rate fell from 6.3146 against the greenback at the start of July to 6.3449 by the end of August.
But Zhou predicts the outflow to cease in the coming months as the quantitative easing moves by the US Federal Reserve may increase liquidity worldwide and fuel the risk appetite of investors.
China's foreign exchange regulator said last week the country's international payments will "hopefully" be basically balanced in the second half as "positive factors" are starting to take effect.
The yuan funds stemming from purchases of foreign currencies fell by 17.4 billion yuan last month from July to 25.6 trillion yuan, the People's Bank of China said.
It was the third monthly decline this year, and was faster than a net sales of 3.82 billion yuan in July.
"The size of decline is quite surprising," said Zhou Hao, an economist with ANZ Bank. "It indicated an apparent capital outflow from China due to the weak economic situation. Multinational companies are also withdrawing their accumulated profits from China to shore up their liquidity overseas."
The outflow occurred as the yuan weakened against the US dollar in the past two months, as its exchange rate fell from 6.3146 against the greenback at the start of July to 6.3449 by the end of August.
But Zhou predicts the outflow to cease in the coming months as the quantitative easing moves by the US Federal Reserve may increase liquidity worldwide and fuel the risk appetite of investors.
China's foreign exchange regulator said last week the country's international payments will "hopefully" be basically balanced in the second half as "positive factors" are starting to take effect.
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