China continues to record net forex purchase

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China continues to record net forex purchase

BEIJING - China has continued to record a net foreign exchange purchase last month, and has maintained the yuan's stable exchange rate, as Chinese banks reported a large net foreign exchange purchase last month, official data showed on Tuesday.

In April, Chinese lenders bought $229.7 billion worth of foreign currency and sold $210.6 billion worth. The State Administration of Foreign Exchange said that resulted in a net purchase of $19 billion.

The administration's deputy head, Wang Chunying, said that the development pattern of China's stable forex market and balanced cross-border capital flows has remained the same.

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The tightening of monetary policies in major developed economies will have a spillover effect on international capital flows, but China's forex market has become more mature and resilient to adapt better to changes in the external environment, Wang told Xinhua in an interview.

She said that the recent two-way adjustment in cross-border stock investments will not affect the balance of cross-border capital flows nor the trend of overseas investors steadily increasing their holdings of yuan assets.

Stock investment is only one part of cross-border capital flows, and it does not represent the overall situation, she said.

On the recent depreciation of the yuan, Wang said it was a short-term adjustment that will not change the general characteristics of the yuan's exchange rate, which has two-way fluctuations and general stability at a reasonable and balanced level.

She told Xinhua that the yuan has remained relatively stable against other major currencies for a mega economy like China, the long-term trend in exchange rate is mainly determined by domestic fundamentals.

The dollar index has surged 9 percent since the beginning of the year, and major currencies such as the euro, the Japanese yen and the British pound have all depreciated 8 to 10 percent against the greenback, while the yuan has depreciated just 6 percent on the domestic market, Wang said.

She said that yuan assets are a good choice for investment diversification, because of the independent market trend of yuan assets.

The international community has been supportive of China's economy and financial market development since the move, Wang said.

She said that serving the real economy is now a priority for the forex regulator because they will help enterprises manage risks posed by exchange rate fluctuations.