'FX forwards measure is not capital control'

Foreign currencies are placed next to 100 yuan banknote. [Photo/IC]

China's central bank defended on Tuesday new regulations imposed on the currency forwards market this month, saying they were not a form of capital control and were introduced after investors had speculated in the market.

The controls would help to stabilize China's financial system at a time when increased yuan volatility is likely to cause more companies to incur foreign exchange losses, the People's Bank of China said in a statement on its website.

The central bank also said its intervention in the foreign exchange market was one of the reasons for a fall in foreign exchange reserves and any future fluctuations in reserves would be "normal".

China's foreign exchange reserves, the world's largest, shrank by $93.9 billion in August, the biggest monthly fall on record－to $3.557 trillion, central bank data showed on Monday.

The bank said the fall in foreign exchange reserves was also due to currency fluctuations.

The bank also said in a statement the Chinese economy could maintain medium-to high-speed growth in the long term and the current account would remain in surplus over the long term.