Capital outflow pressure easing
Print Edition
CHINA will continue to open up the foreign exchange market and diversify trading products after capital outflow pressure eased in the first quarter, the foreign exchange regulator said yesterday.
Chinese banks sold a net US$36.4 billion in foreign exchange in March, up from US$33.9 billion February but sharply below US$54.4 billion in January and US$89.4 billion in December, data with the State Administration of Foreign Exchange showed yesterday.
The figure marked the ninth straight month of deficit.
Wang Chunying, spokeswoman for SAFE, said China still faces capital outflow but the pressure has been easing compared with previous months.
She said domestic individuals and companies have slowed their purchase of foreign currencies, indicating a stable market sentiment.
She attributed the stabilization to improving economic data for March, a trade surplus, and strong international payment capabilities.
“Along with China’s economic growth and structural adjustment, domestic entities require greater asset allocation in both onshore and offshore market, boosting cross-border capital flow,” Wang said. “It takes time to gradually adapt and improve, but the related capital flow is predictable and controllable.”
SWS Research said in a report that recent positive economic data could ease depreciation pressure on the yuan, and the central bank is not likely to guide the yuan lower in the short term.
SAFE yesterday reiterated its support for legal cross-border capital flow and development of a more sophisticated foreign exchange market to give firms more tools to control risks.
“We will continue to push forward deepening and opening of the foreign exchange market, including enriching trading products, expanding market players, promoting market opening, and improving infrastructure,” said Wang.
She said the authorities will develop more foreign exchange derivatives and unify onshore and offshore yuan exchange rates.
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