China's yuan funds for foreign exchange rise in February

Source: Xinhua | 2018-03-15

China's yuan funds outstanding for foreign exchange continued to grow last month, official data showed Wednesday.

The funds stood at 21.49 trillion yuan (about 3.4 trillion U.S. dollars) at the end of February, up by 4.05 billion yuan from a month earlier, according to the People's Bank of China (PBOC).

It marked the second consecutive monthly increase of the funds, which dropped 36.32 billion yuan in December and climbed 4.48 billion yuan in January.

As the Chinese currency is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by China's trade surplus and foreign investment in the country, adding funds to the money market.

Such funds are an important indicator of cross-border foreign capital flows and domestic yuan liquidity. An increase in the funds usually signals eased capital flight pressure, while a decrease often means higher capital flight pressure.