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Business / Markets

China cross-border capital flow more balanced

(Xinhua) Updated: 2014-07-23 14:24

BEIJING - Chinese cross-border capital flow was more balanced in the second quarter of this year, according to new data on foreign currencies bought and sold by commercial banks.

Guan Tao, head of the balance of payment division under the State Administration of Foreign Exchange, told a press conference on Wednesday that Chinese banks' net forex purchases stood at $29 billion in the second quarter, down 21 percent from a year earlier and plunging 82 percent from the previous quarter.

"The imbalance of supply and demand on the spot forex market has significantly improved," Guan said.

In the first quarter of 2014, Chinese banks saw a whopping $159.2 billion in net forex purchases, which represent the difference between foreign currency purchases and sales by commercial banks.

Guan attributed the drop in net purchases in the second quarter mainly to the Chinese currency's trend of two-way fluctuation since the beginning of the year, which has made companies and individuals more willing to hold foreign currencies.

The central parity of the yuan against the US dollar depreciated about 1 percent since the beginning of the year, ending the market's expectations of one-way appreciation of the currency.

In the second quarter, forex sales to clients made up 69 percent of banks' total forex payments, up from 61 percent in the first quarter. The proportion of sales made to clients measures the willingness of companies and individuals to hold foreign currencies.

Guan said there will be some pressures for net capital inflow in the latter half of 2014 due to the country's stabilizing economy, recovering foreign trade and higher domestic interest rates.

China cross-border capital flow more balanced

China cross-border capital flow more balanced

China's June forex purchase likely to rebound RMB will cash in on growth

 

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