China’s yuan funds for foreign exchange rise in April

An employee counts renminbi and dollars at a bank in Qionghai, South China’sHainan province. [Photo/VCG]

BEIJING – China’s yuan funds outstanding for foreign exchange grew for the fourth month in a row in April, official data showed Thursday.

The funds stood at 21.5 trillion yuan (about $3.4 trillion) at the end of April, up by 7.42 billion yuan from a month earlier, according to the People’s Bank of China (PBOC).

April’s increase followed a rise of 7.84 billion yuan recorded in March.

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 higher capital flight pressure.

China’s foreign exchange reserves stood at $3.1249 trillion at the end of April, lower than the $3.1428 trillion registered at the end of March, according to the central bank.

The government attributed the drop to the weakening of non-dollar denominated currencies against the greenback and lower asset prices. Cross-border capital flows and transactions remained stable.

This article provided by NewsEdge.