Chinese banks see net forex purchase rise in October

BEIJING - Chinese banks recorded the second straight month of net foreign exchange purchase in October as cross-border capital flows stabilized, official data showed Thursday.

Chinese lenders bought $128.9 billion?worth of foreign currency last month and sold $126.1 billion, resulting in a net purchase of $2.8 billion, the State Administration of Foreign Exchange (SAFE) said in a statement.

The surplus widened from $300 million of net purchase in September, when banks bought more forex than they sold for the first time in more than two years.

In the first 10 months, Chinese banks bought $1.33 trillion worth of foreign currency and sold $1.44 trillion, resulting in a net sales of $110.1 billion, the data showed.

SAFE said the country's cross-border fund flows remained basically balanced in October, with market entities acting more rationally.

The willingness of individuals to buy foreign currencies fell in October from a seasonal high during the third quarter, and was sharply down compared with a year ago, it said.

Capital inflows through goods trade, foreign investments, and cross-border financing activities maintained upward momentum.

There had been concerns over capital flowing out of the Chinese market in the second half of 2016, when the economy was facing downward pressure and the yuan was in the middle of a losing streak against the US dollar.

In January, China's forex reserves had plunged below $3 trillion, but as the economy stands on a firmer footing and the yuan continues to stabilize, the stockpile has increased steadily since February.

Recent data showed that China's forex reserves rose for the ninth month in a row in October to $3.1092 trillion, up $703 million from a month earlier.

As China restructures its economy to push sustainable growth, cross-border capital flows will continue to keep balanced and stable in the medium and long term, SAFE said.