Investment Outflow Reaches $95.6B in China

China’s central bank and financial institutions sold 628.98 billion yuan ($95.6 billion) of foreign exchange in December, according to a calculation by The Wall Street Journal based on central bank data Monday, as capital flows out of the world’s second-largest economy accelerated.

The December figure came after a net sale of 221.27 billion yuan of foreign currencies in November, indicating that outflow pressure increased as the domestic economy cools.

Also in December, China’s foreign-exchange reserves posted the biggest monthly drop on record, falling to their lowest level in nearly three years as the yuan further weakened against the U.S. dollar.

The banking system’s total forex-purchase position stood at 26.59 trillion yuan at the end of December, down from 27.21 trillion yuan at the end of November, the People’s Bank of China said. The data include purchases and sales by commercial banks and other financial institutions, but mostly reflect transactions by the central bank.

The figure is seen as a rough guide to changes in domestic liquidity conditions, but doesn’t indicate how much of the net inflows the central bank has sterilized through the issuance of central bank bills or other measures.

via MarketWatch

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