The story appears on

Page A6

February 18, 2017

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Economy

PBOC sells least forex in 5 months

CHINA’S central bank sold the least amount of foreign exchange in five months in January, reinforcing views that capital outflows have eased as policy-makers step up scrutiny of cross-border flows and as the yuan steadies.

Net forex sales by the People’s Bank of China amounted to 208.8 billion yuan (US$30.4 billion) last month, according to central bank data released yesterday.

That compared with net sales of 317.8 billion yuan in December and 644.54 billion yuan in January 2016.

Also yesterday, the State Administration of Foreign Exchange said commercial banks’ sales of foreign currencies fell to a three-month low of US$19.2 billion, compared with US$46.3 billion in December.

SAFE said pressure from capital outflows has eased in 2017 and cross-border flows were becoming more balanced.

China’s forex reserves fell to below the US$3 trillion level in January for the first time in nearly six years. But the drop eased from recent months, suggesting capital flight is slowing.

A recent stumble in the rising US dollar has also helped ease pressure on the yuan and other emerging-market currencies. The yuan has gained 1.2 percent against the dollar so far this year, after sliding 6.6 percent in 2016.

Currency strategists surveyed by Reuters, however, expect the yuan to come under renewed pressure in coming months on expectations that the US central bank will raise interest rates two to three times this year, bolstering the dollar.

Tim Condon, ING’s head of Asia research in Singapore, said the forex sales data were good news for the PBOC as it indicated a significant drop in onshore dollar buying in January, but added that the fate of the yuan depends on the dollar.

“There’s still uncertainty as to what would happen if we go into a period of sustained dollar appreciation,” Condon said.

SAFE said foreign currency purchases for travel and overseas study fell 28 percent month on month in January, the biggest travel season in China, indicating more stringent reporting requirements could be having an effect on individuals’ forex purchases.

Banks on January 1 began requiring individuals using their US$50,000 annual foreign currency quota to specify how and when they will use funds, with additional documentation sometimes required. The new rules are meant to prevent forex purchases from being used for illegitimate purchases such as property.

Outbound direct investment from China fell 35.7 percent in January from a year earlier.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend