China's funds for foreign exchange rebound in May

BEIJING - China's yuan funds outstanding for foreign exchange increased by 23.4 billion yuan ($3.7 billion) in May from April, the country's central bank said Tuesday.

As of the end of May, the nation's total yuan funds outstanding for foreign exchange stood at 25.6 trillion yuan, according to the People' s Bank of China.

Analysts said the reversed downward trend was due to the rebound in the country's foreign trade in May from a lower-than-expected level in April.

Both imports and exports reached record highs in May, with exports climbing 15.3 percent from a year earlier to $181.14 billion, and imports rising 12.7 percent to $162.44 billion, according to official data.

In May, the trade surplus hit $18.7 billion, slightly higher than the $18.42 billion seen in April, the data showed.

Meanwhile, foreign direct investment in China ended six consecutive months of declines and hit $9.23 billion in May, up from $8.4 billion registered in April.

The increase of yuan funds outstanding for foreign exchange in May, however, was far less than the amount that was drained from the country's money market through open market operations in the month, according to China International Capital Corporation Limited.

With growing concerns over a weakening yuan, the country's yuan funds outstanding for foreign exchange may shrink in June and the central bank might cut the reserve requirement ratio again in July, said analysts.