Chinese banks continue net forex purchases

Yuan exchange rate's floating range widened

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BEIJING -- Chinese banks bought more foreign currency than they sold in March, the eighth consecutive month of net foreign exchange purchases, China's forex regulator said Thursday.

Chinese lenders bought $167.8 billion's worth of foreign currency in March and sold $127.6 billion, resulting in a net buy of $40.2 billion, the State Administration of Foreign Exchange (SAFE) said in a statement.

The run of net forex purchases began in August last year, but the surplus has been narrowing, down from $45.7 billion in February and $73.3 billion in January.

"Overall, China is maintaining cross-border capital inflows but the trend has been easing recently," said Guan Tao, head of the SAFE's Balance of Payments Department.

Zhong Zhengsheng, macroeconomic researcher with Guosen Securities, pointed out that due to expectation of yuan depreciation, clients are proving more willing to hold foreign assets.

In the first three months of 2014, Chinese banks bought $516.8 billion in foreign currency and sold $357.5 billion, bringing the net purchase volume to $159.2 billion, according to the SAFE statement.