China's yuan funds outstanding for forex further decline

BEIJING - China's yuan funds outstanding for foreign exchange continued to decline in March, central bank data showed Wednesday.

The funds stood at 21.2 trillion yuan ($3.01 trillion) at the end of March, down 17.01 billion yuan from a month earlier, according to the People's Bank of China.

As the Chinese yuan is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by a 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.

The March reading marked the second straight month of decline after a rebound in January ended a falling streak of 17 consecutive months.

It came amid a decline in the foreign direct investment (FDI) the country received. FDI flows into the Chinese mainland dropped 14.1 percent year on year in March as the COVID-19 pandemic has wreaked havoc on the global economy and dimmed the growth prospects of global trade and investment.