China records biggest forex drop in August

GMT 20:07 2015 Monday ,14 September

Arab Today, arab today China records biggest forex drop in August

China stocks
Beijing - XINHUA

Chinese financial institutions' new yuan funds outstanding for foreign exchange witnessed a record dive of 723.84 billion yuan (113.63 billion U.S. dollars) to 28.18 trillion yuan last month, data released Monday showed.

The central bank's new yuan funds outstanding for foreign exchange totaled 26.1 trillion yuan in August, a landmark slump of 318.35 billion yuan month on month, according to data released by the People's Bank of China (PBOC).

The PBOC releases two sets of data on yuan funds for foreign exchange every month by differentiating forex purchases by the central bank and commercial banks.

The funds are an important indicator for foreign capital flow in and out of China as well as domestic yuan liquidity.

China's inter-bank foreign exchange market will be opened to foreign central banks, Premier Li Keqiang said at the opening ceremony of the Summer Davos meeting.

The PBOC said foreign central banks and global international organizations have already been able to operate transactions of derivatives through the PBOC, and the next step is to realize the premier's call.

China's foreign exchange reserves fell to 3.56 trillion U.S. dollars at the end of August, down 93.9 billion U.S. dollars, marking the fourth consecutive month of falling forex reserves, according to the PBOC data.

A property downturn, industrial overcapacity, sluggish demand and struggling exports dragged growth down to 7 percent for the first half of the year.

Data on Sunday showed China's value-added industrial output expanded 6.1 percent year on year in August, up slightly from 6 percent in July but still fell short of market expectations.

On top of that, fresh pressure from capital market volatility, currency devaluation in emerging markets, and slumping global commodity prices are further muddying growth prospects that fueled worries of foreign capital outflows.

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