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1st LD-Writethru: Chinese banks' net forex sales slightly up in March

Xinhua, April 20, 2017 Adjust font size:

Net foreign exchange (forex) sales by Chinese banks rose slightly in March while capital outflow still remained tame, official data showed Thursday.

Banks bought 145 billion U.S. dollars worth of foreign currencies and sold 156.6 billion dollars, resulting in net sales of 11.6 billion dollars last month, according to the State Administration of Foreign Exchange (SAFE).

The deficit was up from February's 10.1 billion dollars but lower than the 19.2 billion dollars in January.

"Generally speaking, the pressure of cross-border capital outflow has eased significantly in the first quarter, and the demand and supply of foreign currencies have become more balanced," said SAFE spokesperson Wang Chunying during a press conference.

In the January-March period, banks' net forex sales stood at 40.9 billion U.S. dollars, down 67 percent from a year ago.

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

But the yuan has gradually recovered from its weakness as the Chinese economy firmed up in the first quarter of the year, with forecast-beating GDP growth, and the greenback became less volatile.

The central parity rate of the yuan weakened 128 basis points to 6.8792 against the U.S. dollar Thursday, according to the China Foreign Exchange Trade System.

Another indicator of cross-border capital flow, China's forex reserves rose for the second month in a row in March to 3.0091 trillion U.S. dollars, the first back-to-back increase since April 2016. In January, the reserves slipped below the closely watched 3-trillion-dollar mark.

Cross-border capital flows will continue to head for equilibrium due to China's solid economic fundamentals and strong appeal to overseas investors, Wang said.

With enormous market potential, China ranked third in the world in attracting foreign direct investment in 2016, only after the United States and Britain, and topped the list of emerging economies, data from the United Nations Conference on Trade and Development showed.

The government has rolled out an array of measures to open up more to the world, granting easier access for foreign investors and improving the business environment.

Wang also cited continued opening up in the financial sector, a more flexible yuan, a current account surplus and abundant forex reserves. Endi