MNI 5 Things: Chinese Banks' FX Sales hit 21-month high in Sep

     BEIJING (MNI) - Chinese banks sharply increased net selling of foreign

exchange to their clients in September, a sign of rising capital outflows at a

time of a weakening yuan and a Sino-U.S. trade war, according to data released

by the State Administration of Foreign Exchange on Thursday.

     --Banks sold a net CNY110.3 billion in foreign currency, the most since

December 2016, when it came in at CNY298.3 billion. This compared with CNY63.3

billion in August. The number is a key indicator of capital flows in and out of

the country. The greater the net sale number, the larger the outflow.

     --In terms of forward contracts, banks were net forex purchasers on behalf

of their clients in September, suggesting market participants are betting on a

stronger yuan in the longer term. Banks' net purchases of forex forward

contracts totalled CNY1.8 billion, compared with net sales of CNY36.9 billion in

August. This is a bullish sign, despite the recent slide of yuan against the US

dollar.

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

and banks' proprietary trading desks, rose to a net CNY120.2 billion in

September from CNY101.7 billion in August, SAFE said. For the first nine months

of the year, banks sold a net total CNY196.9 billion to clients.

     --The yuan depreciated by 0.75% against the U.S. dollar in September,

adding to the 0.06% depreciation in August. The yuan closed at 6.9498 against

the U.S. dollar on Thursday, the highest point since January 3, 2017.

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

fell CNY119.4 billion in September, indicating that capital outflow pressure is

building as yuan weakens.

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

[TOPICS: MAQDS$,MAUDR$,MAUDS$,M$A$$$,M$Q$$$,M$U$$$]