The exchange rate of the yuan has been stabilizing due to the gradual release of depreciation pressure, and there is no market force to trigger massive capital outflows, China’s foreign exchange regulator said Thursday.
“Since August, the central parity rates of the yuan against the US dollar has lost about 4 percent. The yuan also lost various degrees of value against euro, Japanese yen and British pound. The pressure of depreciation has almost all been released,” said Wang Yungui, an official with the State Administration of Foreign Exchange.
China had a surplus of $365.6 billion in foreign trade in the first eight months this year, while making use of more than $80 billion of foreign investment. In general, there was about a $50 billion monthly surplus in the country’s balance of payments. “This surplus is a basic guarantee for the yuan not to lose value,” Wang said.
Also, China’s 7 percent growth rate means a high return for investment, which will retain capital and attract more foreign investment.
Statistics show that the spot and forward foreign exchange transactions in China’s banks grew to more than $90 billion in August; the outflow of capital through banks grew to more than $70 billion. By the end of August, Chinese financial institutions had $667.4 billion of foreign exchange deposits.
Wang said it shows that China has been moving more foreign reserves from the State pool to the tens of thousands of smaller pools. The foreign reserve wealth is becoming more diversified, which is in line with the country’s reforms to allow the market to play a bigger role in allocating foreign exchange.
Wang said the cross-border capital flows did fluctuate recently, but not dramatically. The latest monitoring shows that the banks’ purchase and sales of foreign exchanges have been on the decrease, and market anxiety has been returning back to normal levels. (The Daily Mail – People’s Daily news exchange item)
Sep 24, 2016 0
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