Banks buy more forex to post surplus
Print Edition
CHINESE banks bought more foreign currencies than they sold in May — the first such surplus in nine months, official data showed yesterday.
The banks bought 872.4 billion yuan (US$140.5 billion) in foreign currencies and sold 864.6 billion yuan, resulting in a surplus of 7.8 billion yuan, the State Administration of Foreign Exchange said in a statement. The first surplus since August indicates more balanced development of China’s foreign exchange revenue and expenditure.
Of the total, banks bought 840.7 billion yuan and sold 816.1 billion yuan in foreign currencies for clients, resulting in a 24.5 billion yuan surplus in May.
The banks themselves bought 31.7 billion yuan and sold 48.4 billion yuan in foreign currencies, giving a deficit of 16.7 billion yuan in May.
Banks’ foreign exchange spending and buying began a favorable trend in April, with May the turning point that saw capital inflows instead of outflows, said SAFE official Wang Yungui.
“The surplus is what we were hoping for, as it creates a stable environment for reform of forex management,” Wang said.
The banks’ foreign exchange settlement posted a deficit of 50.4 billion yuan in January, 105.4 billion yuan in February, 406.2 billion yuan in March and 887.6 billion yuan in April. The first quarter saw a total deficit of 562 billion yuan, up 97 percent from the fourth quarter of last year.
It is a common practice for banks to sell foreign currencies to firms or individuals and buy foreign currencies from them. Known as the bank exchange, it can be used to measure the supply-demand relationship in the interbank forex market and impact the yuan’s exchange rate.
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