Chinese Banks Records 1st Forex Purchase in April 2018

Flag of ChinaThe commercial banks in China recorded their first ever Forex purchase in April this year. Last time, they purchased back in December 2017. As a result of which, there is a balance between the Forex market supply and demand based on the feedback from SAFE or State Administration of Foreign Exchange.

In April 2018, lenders in China bought Forex purchases to the tune of $157.4 billion while they have sold approximately $146.7 billion. As a result, there is a net purchasing of $10.6 billion. The net Forex sale registered in March 2018 was $9.2 billion.

As per a spokesperson from SAFE, there is a complete balance in China regarding Forex demand and supply. There is an equivalent movement in the flow of money both coming and going out of the country. The stability is the main reason for the economic fundamentals of this nation which focuses on stabilising the Forex market expectations.

In April, the emerging markets were getting a lot of pressure from both capital outflow and currency depreciation. The main reason was due to higher US interest rates and substantial value of dollar mingled with the volatile international market.

One spokesperson from SAFE (State Administration of Foreign Exchange) made the following statement:

Based on the sustained steady operation of the domestic economy, China’s forex market will be able to adapt to external changes and maintain reasonably; balanced cross-border capital flows in the future.

Increase in Forex Reserves

During the first quarter of 2018, Chinese Yuan was performing well against US Dollar, but in the past few weeks, it has become weak. In spite of its weakening against US Dollar, Yuan is still firm as compared to other important currencies of the world.

There was a growth of 8% in China’s economy during the first quarter of 2018. The government had set a target for 6.5%, but it has easily surpassed the figure. In April, the economic activities in China have become quite stable with a strong performance from the industrial sector making up for the slowdown of fixed asset investment and retail sales.

Between January and April 2018, the commercial banks in China have registered $7.6 billion regarding net Forex sale. There is a subsequent increase in the Yuan funds for purchasing the net Forex. The Chinese Forex reserves have increased for the fourth month which is an excellent indication of China’s economy. Increased reserve means a decline in capital flight pressure while lower funds mean an increase in capital flight pressure. As at the end of April 2018, the total Forex reserves of China stand at $3.1249 trillion. Editor Editor

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