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Chinese banks report net forex sales drop in July

Updated: Aug 17,2017 9:22 AM     Xinhua

BEIJING — Chinese commercial banks recorded a smaller net forex settlement deficit in July as cross-border capital flows stayed balanced and stable, the forex regulator said on Aug 16.

Commercial banks bought $128 billion worth of foreign currencies and sold $143 billion last month, resulting in net sales of 15 billion dollars, according to the State Administration of Foreign Exchange (SAFE).

This marks a 26 percent decline from a monthly deficit of $21 billion in June.

In the first seven months of this year, banks bought $900 billion of foreign currency and sold $1 trillion, the SAFE said in a statement.

The regulator said forex supply and demand in July has been more balanced than previous months, while foreign payments of domestic entities were stable and orderly, it said.

Enterprises were more willing to seek foreign-currency financing, while individuals were more rational in forex purchase as market expectations stabilized, said the SAFE.

In July, the amount of foreign currencies bought by individuals dropped 35 percent from the June level and was 27 percent down year on year.

Another indicator of cross-border capital flows, China’s forex reserves rose for a sixth consecutive month in July to $3.1 trillion, increasing $23.9 billion from a month earlier, official data showed.

The Chinese yuan has been advancing against the US dollar in recent months on back of a weaker dollar and firming domestic economy, which has strengthened by nearly 3,000 basis points since the beginning of this year.

The yuan’s central parity rate was 6.6779 against the dollar on Aug 16.

The SAFE attributed a better forex market to the country’s improving economy and stabilizing market expectations, which expects cross-border capital flows to stay generally stable in the future.

China’s economy expanded 6.9 percent in the first half, well above the target of around 6.5 percent for the year.