A flood of billions of US dollars out of China slowed dramatically in the second quarter, official figures showed yesterday, despite the yuan’s persistent weakness making it less attractive to hold.
“Cross-border capital outflow pressures have gradually eased,” Chinese State Administration of Foreign Exchange spokeswoman Wang Chunying (王春英) said at a briefing.
Foreign exchange settlement data showed Chinese banks sold US$49 billion more in foreign currency than they received between April and last month.
That “narrowed sharply” from US$124.8 billion in the January-to-March period, Wang said.
The monthly figures were even more dramatic, with US$12.8 billion leaving last month, down from US$54.4 billion in January, she added.
Money has been flowing out of China in recent years as its growth has slowed, adding to downward pressure on its currency and making yuan-denominated assets less attractive to hold, in a vicious cycle for the Chinese economy — the world’s second largest.
Authorities have tightened restrictions on cross-border money flows, including capping cash withdrawals overseas using domestic bank cards at 100,000 yuan (US$15,000) per year from January and requiring banks to pay a 20 percent deposit on forward sales of foreign exchange to stem speculation.
A forward sale is a commitment to sell at a predetermined price and date.
Chinese firms have embarked on a string of high-profile overseas acquisitions and Wang insisted that capital is leaving mainly because of “continued expanding overseas investment” by Chinese firms, rather than “foreign capital withdrawing from China.”
SWIFT, the global provider of financial messaging services, this week said that the yuan’s share of global payments slid to 1.72 percent last month, down from 1.90 percent in May.
However, the unit last month remained in sixth place as a world payment currency, behind the Canadian dollar, where it has stood since April, SWIFT said.
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