Chinese banks record net forex purchase in April

2018-05-18
Xinhua

BEIJING — Chinese commercial banks recorded a net foreign exchange purchase in April, and forex market supply and demand remained balanced, the country’s forex regulator said on May 18.

Chinese lenders bought $157.4 billion worth of foreign currencies and sold $146.7 billion last month, resulting in a net purchase of $10.6 billion, the State Administration of Foreign Exchange (SAFE) said in a statement.

It t was the first net forex purchase since December 2017. In March, the banks saw a net forex sale of $9.2 billion.

The forex market supply and demand has been “relatively balanced” recently, a SAFE spokesperson said in a separate statement, noting overall equilibrium in cross-border fund flows.

The spokesperson, who was not identified, attributed the stability to the essential role played by China’s economic fundamentals in stabilizing forex market expectations.

Since April, emerging markets have seen increased pressure for capital outflow and currency depreciation, with a more volatile international financial market, a stronger dollar and higher US interest rates, according to the spokesperson.

However, “based on sustained steady operation of the domestic economy, China’s forex market will be able to adapt to external changes and maintain reasonable, balanced cross-border capital flows in the future,” said the spokesperson.

The Chinese yuan has weakened against the dollar in recent weeks after marked strengthening in the first quarter, but it has continued to strengthen against a basket of currencies.

China’s economy expanded 6.8 percent year-on-year in the first quarter of 2018, above the government’s annual target of around 6.5 percent.

Economic activity held largely stable in April, with strong momentum in the industrial sector buffering the impact from slowing retail sales and fixed-asset investment.

In the first four months of the year, Chinese banks saw a net forex sale of $7.6 billion, according to SAFE data.