MNI 5 Things: China Banks Net FX Buyer Signals Less Cap Drain

     BEIJING (MNI) - Here are the key takeaways from China's FX movement data

released by the State Administration of Foreign Exchange (SAFE) on Friday:

     --Banks purchased net CNY103.1 billion FX on behalf of their clients,

reversing the net selling of CNY56.0 billion FX in December. This indicated that

capital outflow further eased as the yuan advanced 2.33% against the dollar last

month. A greater net purchases number corresponds to larger FX inflow.

     --Banks' net purchases of FX forward contracts totaled CNY45.1 billion,

compared with CNY66.3 billion in December. The reduced net purchase position

suggested market participants were holding off and betting on a stronger yuan in

the longer term. 

     --Banks' total net forex purchase, including both transactions with clients

and banks' proprietary trading desks, recorded CNY81.8 billion, reversing the

net sale of CNY48.8 billion in December. 

     --Since this year, Chinese investors are more willing to hold yuan assets,

while the main channels of cross-border capital flows are showing positive

changes, Wang Chunying, spokeswoman of SAFE, said in a statement.

     --China's forex purchase position on the central bank's balance sheet fell

for the sixth month, down CNY1.21 billion to CNY21.25 trillion in January, a

smaller decline from the CNY4.04 billion reduction in December, also indicating

capital outflow pressure has moderately eased as yuan strengthened.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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