Chinese banks' net forex sales rise in November

BEIJING - Chinese banks continued to see net foreign exchange sales in November, and the volume expanded, signaling increased capital outflows.

Chinese lenders bought $117.9 billion worth of foreign currency last month and sold $151.3 billion, resulting in a net sale of $33.4 billion, the State Administration of Foreign Exchange (SAFE) said in a statement Friday.

The amount has increased from the $14.6 billion seen in October, suggesting the pressure of capital outflow is rising.

Concerns about capital outflows had been on the rise as the economy slowed and the Chinese currency is under depreciation pressure.

The US Federal Reserve Wednesday decided to raise interest rates and hinted at more hikes next year, fueling capital outflow in China.

The exchange rate of the yuan devaluated at a relatively small pace against the US dollar, while keeping basically stable against a basket of currencies, showing the yuan's resilience against changes on the international market, SAFE said in a separate statement.

It is noteworthy that while the yuan's exchange rate against the dollar has reached its lowest in eight years, it is gaining value against other currencies.

The yuan has strengthened 7.5 percent, 2.5 percent and 0.5 percent against the yen, the euro and the British pound, respectively, in the recent two months.

It has also appreciated 4.1 percent, 3.3 percent and 1.2 percent against the ringgit, the won and the Singapore dollar.

"The yuan still presents the characteristics of a stable and strong currency in the global currency system," said Yi Gang, deputy governor of the People's Bank of China (PBOC), the central bank.

As China's economy recovers and institutional reform improves the business environment, Yi believes capital outflow will ease off.