Chinese banks continue to see net forex purchase in May

BEIJING -Chinese commercial banks continued to see a net foreign exchange purchase in May and cross-border capital flows remained basically stable, the country's forex regulator said Tuesday.

Chinese lenders bought $172.6 billion worth of foreign currencies and sold $153.2 billion worth last month, resulting in a net purchase of $19.4 billion, the State Administration of Foreign Exchange (SAFE) said in a statement.

In April, the banks recorded a net forex purchase of $10.6 billion, marking the first net forex purchase since December 2017.

The SAFE attributed the net purchase to the decisions of businesses and individuals to adjust their currency-holding structure amid stable expectations of the foreign exchange market.

Although some emerging economies have been facing pressure from capital outflows and currency depreciation since May, the Chinese economy has maintained a stable and improving trend, which effectively stabilized market expectations and offered fundamental support for the forex market, a SAFE spokesperson noted in a separate statement.

Earlier data showed China's foreign exchange reserves stood at $3.11 trillion at the end of May, down $14.23 billion from a month earlier.

China's economy expanded 6.8 percent year-on-year in the first quarter of 2018, above the government's annual target of around 6.5 percent.

Economic activity continued steady expansion last month thanks to resilient industrial output and manufacturing investment.

Industrial output expanded 6.8 percent year-on-year in May, slower than the 7-percent rise the previous month but still faster than the 6-percent increase in March, according to data from the National Bureau of Statistics.