China’s yuan funds for foreign exchange rise in February

2018-03-14
Xinhua

BEIJING — China’s yuan funds outstanding for foreign exchange continued to grow last month, official data showed on March 14.

The funds stood at 21.49 trillion yuan ($3.4 trillion) at the end of February, up by 4.05 billion yuan from a month earlier, according to the People’s Bank of China (PBOC).

It marked the second consecutive monthly increase of the funds, which dropped 36.32 billion yuan in December and climbed 4.48 billion yuan in January.

As the Chinese currency is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by China’s trade surplus and foreign investment in the country, adding funds to the money market.

Such funds are an important indicator of cross-border foreign capital flows and domestic yuan liquidity. An increase in the funds usually signals eased capital flight pressure, while a decrease often means higher capital flight pressure.

China’s foreign exchange reserves fell 0.85 percent in February following 12 consecutive months of rises, coming in at $3.134 trillion, according to earlier PBOC data.