Business / Markets

Chinese prefer yuan than foreign currency

(Xinhua) Updated: 2012-12-25 09:14

BEIJING - Chinese individuals and institutions sold more foreign currency than they bought through Chinese banks in November, statistics from the country's foreign exchange authority showed Monday.

Amid the yuan's strengthening trend, Chinese clients exchanged $136.6 billion in foreign currency for yuan through Chinese banks while buying $118.1 billion in foreign currency from financial institutions last month, according to data from the State Administration of Foreign Exchange.

This resulted in a foreign exchange surplus of $18.5 billion in November, widening from the $7.8 billion surplus registered in October, according to the SAFE.

"The widening surplus suggests Chinese businesses and individuals are more willing to hold onto the yuan amid expectations for a stronger currency," said Zhao Qingming, a financial expert at the University of International Business and Economics.

In China's foreign exchange spot market in November, the yuan touched its daily rising limit against the US dollar at some point during 20 of the month's 22 trading days.

Xie Yaxuan, a researcher with China Merchants Securities, said November's surplus invalidates some previous estimates of the outflow of "hot money," or speculative capital, after China's yuan funds outstanding for foreign exchange in domestic financial institutions saw a sharp decline of 73.6 billion yuan in November.

Xie said the reasons for the drop are still subject to other sets of data from the central bank.

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