Yuan funds for foreign exchange decline

BEIJING - China's total yuan funds outstanding for foreign exchange declined in June, indicating the first net outflow of capital since last year, according to data released on Monday by China's central bank.

China's total yuan funds outstanding for foreign exchange reached 27.39 trillion yuan ($4.45 trillion) at the end of June, down 41.2 billion yuan over the previous month, the figures from the People's Bank of China (PBOC) showed.

The data includes foreign exchange purchases and sales by commercial banks and other financial institutions but mostly reflects transactions by the central bank.

The net forex purchase in May hit a six-month low of 66.86 billion yuan, slumping from April's 294.35 billion and the average 315.3 billion during the first four months of the year, according to PBOC data.

Analysts believe that the slow growth of foreign trade, the US Federal Reserve's plan to taper off QE3 and the weakening expectation of the yuan's appreciation are reasons behind the capital outflow.

China's gross domestic product growth slowed to 7.6 percent in January-June of 2013, the weakest first-half performance in three years.

Growth in the second quarter stood at 7.5 percent, down from 7.7 percent during the first quarter, data from the National Bureau of Statistics showed.

Meanwhile, China's exports took a surprising tumble in June, dropping 3.1 percent year on year to $174.32 billion.