BEIJING: CHINESE banks continued to see net foreign exchange sales in February, but the volume has kept narrowing in a sign of easing capital outflows.
Chinese lenders bought US$93.7 billion worth of foreign currency last month and sold US$127.7 billion, resulting in a net sale of US$33.9 billion, the State Administration of Foreign Exchange said in a statement yesterday.
Although the data marked an eighth straight month of deficit, it has narrowed sharply from the US$193 billion seen in January and US$229.7 billion in December.
“The data showed China’s cross-border capital outflow pressure has eased significantly,” the regulator commented in a separate statement.
It is expecting cross-border capital flow to be basically stable in the near future as global financial markets steady based on the low possibility of a further interest rate hike from the US Federal Reserve.
Moreover, China’s 2016 growth target of 6.5-7 percent still makes the economy among the world’s best performers and it will keep attracting foreign investment, the regulator said.
Concerns about capital outflows have been on the rise as the economy slows and the Chinese currency has headed south since China revamped the foreign exchange mechanism last year. However, authorities have repeatedly denied that there is any basis for continued weakness of the Chinese currency yuan as the country’s economic fundamentals remain sound. They also cited China’s current account surplus and foreign exchange reserves as support for the balance of international payments.
At a press conference on Saturday during the parliamentary session in Beijing, central bank Governor Zhou Xiaochuan said the yuan has started to return to “a normal and reasonable level” after volatility.
