Chinese banks saw $36.4 billion of net foreign exchange sales in March, up slightly from February but still markedly lower than the previous two months, official data showed on April 21.
Chinese lenders bought 117.7 billion US dollars’ worth of foreign currency last month and sold $154 billion, the State Administration of Foreign Exchange (SAFE) said in a statement.
It was the ninth consecutive month of deficits, and was higher than the $33.9 billion recorded in February. However, it has narrowed from the $54.4 billion seen in January and $89.4 billion in December.
The figures show that the pressure of cross-border capital outflows has eased significantly compared with the start of this year, SAFE spokesperson Wang Chunying said at a press conference on April 21.
In the first quarter, banks registered $124.8 billion of net forex sales, according to SAFE.
Until recently, concerns about capital outflows had been on the rise as the economy slowed and the Chinese currency had fallen since China revamped its forex mechanism last year.
But in the past quarter, companies’ willingness to buy foreign currency has weakened, Wang told reporters.
The outstanding foreign-currency deposits held by Chinese firms and individuals rose $8.4 billion in March, a narrower increase than the $8.8 billion in February and $16.7 billion in January.
“Market sentiment has become more rational, and cross-border capital flows have been steady,” Wang said.
She attributed the change to resumed stability in international financial markets and positive signs in the domestic economy.
China’s economy expanded 6.7 percent year on year in the first quarter, slowing further from the previous quarter but better than what many had feared. Exports and industrial profits have returned to growth, with manufacturing activity picking up and fixed-asset investment accelerating.
Less pressure from capital outflows was also reflected by a return to growth in forex reserves and steadier movement of the yuan since February, Wang said.
Cross-border flows will remain stable in the future, she predicted, citing a bright outlook for the Chinese economy in the long term and the country’s huge forex reserves as a buffer against shocks.