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BEIJING (MNI) - China banks bought more foreign exchange from their clients
in October, another sign that capital outflow pressures are easing as the yuan
exchange rate continues to show two-way movement and capital outflow controls
have had their intended effect, according to the latest figures from the State
Administration of Foreign Exchange.
SAFE said Thursday that Chinese banks bought a net CNY50.1 billion from
clients in October, compared with a net purchase of CNY21.8 billion in
September. The number, along with the forex purchase position number released by
the People's Bank of China on Tuesday, is treated as a key indicator of the
level of capital flows into and out of the country. The bigger the purchase
number, the less the outflows.
The PBOC said banks' forex purchase position rose CNY2.10 billion to
CNY22.22 trillion in October, the second consecutive monthly growth since 2015.
Liu Jian, a forex analyst at Bank of Communication, told MNI that the net
purchase of forex "indicates that cross-border capital has been experiencing a
marginal inflow, considering that yuan depreciation expectations against the
greenback have eased."
Including banks' proprietary trading, their net purchases surged to CNY18.3
billion in October, compared with September's net purchase of CNY1.9 billion.
For the first 10 months, net forex sales of banks to clients stood at
CNY489.4 billion, according to SAFE. Meanwhile, net forex sales including banks'
proprietary trading totaled CNY754.5 billion.
SAFE said that the forex sales ratio of banks' clients, measuring clients'
forex sales as a proportion of their forex incomes, was 62.9% in the first 10
months, 0.1 percentage point lower than in the first three quarters, while the
forex purchase ratio of clients was 61.6%, down 4.5 percentage points compared
with the January-September period.
"Cross-border capital flows maintained a balanced level for the month," the
regulator said in a separate statement.
As of the end of October, outstanding foreign reserves stood at $3.11
trillion, an increase of $98.7 billion from the end of 2016 and of $700 million
from September, SAFE said.
Liu Jian said the two-way movement of the yuan would continue, and so
capital flows would remain balanced.
The Chinese yuan fluctuated in a narrow range in October, rising to as
strong as 6.5729 against the U.S. dollar and dropping to as weak as 6.6645. It
ended the month with a total decline of 0.3%.
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