BEIJING — China’s central bank saw net foreign exchange sales in December after three straight months of net purchases, official data showed on Jan 15.
The People’s Bank of China sold 36.3 billion yuan (about $4.6 billion) worth of foreign exchange last month, the first net sales since the central bank recorded a net purchase for the first time in nearly two years in September.
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 capital flight pressure.
China’s foreign exchange reserves rose for the 11th month in a row to $3.14 trillion at the end of December.