Chinese banks' net forex sales drop further in February

BEIJING - Net foreign exchange sales by Chinese banks continued to drop in February signaling a let-up of capital outflow, official data showed Thursday.

Banks bought $108.8 billion worth of foreign currency and sold 118.9 billion dollars, resulting in net sales of $10.1 billion last month, according to the State Administration of Foreign Exchange (SAFE).

The deficit was down from January's $19.2 billion and $46.3 billion in December.

The SAFE said forex demand and supply were basically balanced in February, noting that cross-border fund flow had improved.

China maintained a net inflow of funds in merchandize trade last month, while companies and individuals were more rational in forex purchase, it said.

There had been rising concerns about capital flight in the second half of 2016, when the economy was facing looming downward pressures and the Chinese yuan was in the middle of a losing streak against the greenback.

The yuan gradually recovered from its weakness in recent months, as the Chinese economy started 2017 on a firmer footing, indicated by a string of economic data including factory activity, foreign trade and fixed-asset investment.

The yuan's central parity rate strengthened 253 basis points to 6.8862 against the US dollar on Thursday.

China's stronger economic fundamentals have enhanced market confidence, the SAFE said.

It predicted cross-border capital flow to become more balanced as the country advances reforms to support higher-quality growth and opens up its financial markets.