Home Forex Net forex sales of Chinese banks’ rise in November

Net forex sales of Chinese banks’ rise in November

by Jonathan Adams

Chinese banks continued to see net foreign exchange sales in November, and the volume expanded, signalling increased capital outflows.

Chinese lenders bought 117.9 billion U.S. dollars worth of foreign currency last month and sold 151.3 billion dollars, resulting in a net sale of 33.4 billion dollars, the State Administration of Foreign Exchange (SAFE) said in a statement Friday.

The amount has increased from the 14.6 billion dollars seen in October, suggesting the pressure of capital outflow is rising.

Concerns about capital outflows had been on the rise as the economy slowed and the Chinese currency is under depreciation pressure.

The U.S. Federal Reserve Wednesday decided to raise interest rates and hinted at more hikes next year, fuelling capital outflow in China.

The exchange rate of the Yuan devaluated at a relatively small pace against the U.S. dollar, while keeping basically stable against a basket of currencies, showing the Yuan’s resilience against changes on the international market, SAFE said in a separate statement.

It is noteworthy that while the Yuan’s exchange rate against the dollar has reached its lowest in eight years, it is gaining value against other currencies.

The Yuan has strengthened 7.5 per cent, 2.5 per cent and 0.5 per cent against the yen, the euro and the British pound, respectively, in the recent two months.

It has also appreciated 4.1 per cent, 3.3 per cent and 1.2 per cent against the ringgit, the won and the Singapore dollar.

“The Yuan still presents the characteristics of a stable and strong currency in the global currency system,” said Yi Gang, deputy governor of the People’s Bank of China (PBOC), the central bank.

As China’s economy recovers and institutional reform improves the business environment, Yi believes capital outflow will ease off.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Related News

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Know more