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March 17, 2017

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Forex sales’ fall signals easing outflow

NET foreign exchange sales by Chinese banks continued to drop in February signaling a let-up of capital outflow, official data showed yesterday.

Banks bought US$108.8 billion worth of foreign currency and sold US$118.9 billion, resulting in net sales of US$10.1 billion last month, according to the State Administration of Foreign Exchange.

The deficit fell from January’s US$19.2 billion and US$46.3 billion in December.

SAFE said forex demand and supply were basically balanced in February, noting that cross-border fund flow had improved.

China kept a net inflow of funds in merchandize trade last month, while firms and individuals were more rational in forex purchases, SAFE said.

There had been rising concerns about capital flight in the second half of 2016, when the economy was facing looming downward pressure and the yuan was in the middle of a losing streak against the greenback.

The yuan gradually recovered from its weakness in recent months, as the Chinese economy started 2017 on a firmer footing, indicated by a string of economic data including factory activity, foreign trade and fixed-asset investment.

The yuan’s central parity rate firmed 253 basis points to 6.8862 against the US dollar yesterday.


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