Trade glut, FDI boost purchases of forex
By Feng Jianmin |
June 20, 2012, Wednesday
|
Print Edition
Print Edition
CHINESE banks bought more foreign currencies in May, reverting an outflow in April, after the country's trade surplus rose and foreign direct investment stabilized.
But analysts said China still faces pressure of a foreign exchange outflow and the central bank may soon cut the required amount of money banks should put aside as reserves.
Yuan funds accumulated from foreign exchange purchases rose by 23.4 billion yuan (US$3.7 billion) in May, after declining by 60.6 billion yuan in April, according to data released by the People's Bank of China yesterday.
The total funds were 25.6 trillion yuan at the end of May, according to the data.
The trade surplus and FDI contributed to the inflow of foreign currencies.
The official data showed that the trade surplus in May rose 44 percent year on year to US$18.7 billion, and FDI edged up 0.05 percent to US$9.23 billion.
But Li Xunlei, a chief researcher at Haitong Securities, said: "Foreign currencies flowing in through the trade surplus and FDI were more than 170 billion yuan while the yuan funds increased only 23.4 billion yuan. That means about 150 billion yuan's worth of foreign currencies have been withdrawn from China."
But analysts said China still faces pressure of a foreign exchange outflow and the central bank may soon cut the required amount of money banks should put aside as reserves.
Yuan funds accumulated from foreign exchange purchases rose by 23.4 billion yuan (US$3.7 billion) in May, after declining by 60.6 billion yuan in April, according to data released by the People's Bank of China yesterday.
The total funds were 25.6 trillion yuan at the end of May, according to the data.
The trade surplus and FDI contributed to the inflow of foreign currencies.
The official data showed that the trade surplus in May rose 44 percent year on year to US$18.7 billion, and FDI edged up 0.05 percent to US$9.23 billion.
But Li Xunlei, a chief researcher at Haitong Securities, said: "Foreign currencies flowing in through the trade surplus and FDI were more than 170 billion yuan while the yuan funds increased only 23.4 billion yuan. That means about 150 billion yuan's worth of foreign currencies have been withdrawn from China."
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