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Pressure easing on foreign exchange sales

By Wang Yanfei | chinadaily.com.cn | Updated: 2017-07-18 11:08

China's central bank continued to see net foreign exchange sales in June as capital flight pressure persists, but a mild month-on-month increase shows that the pressure has largely eased compared to the beginning of the year, data showed on Monday.

The People's Bank of China sold a net 34-billion-yuan worth of foreign currency in June, up from 29 billion yuan the previous month, according to data released on Monday.

It's a sharp drop compared to December when 317.8 billion yuan worth of foreign currency was sold.

Xie Yaxuan, chief economist with China Merchants Securities, said the recent mild fluctuation in the data shows that the central bank has not intervened much to support the yuan's exchange rate as the yuan became steadier in recent months.

"Although a month-on-month increase of net forex sales suggests capital outflow pressure persists, it has largely eased compared to the beginning of the year," Liu Jian, an economist with research institute of Bank of Communications, said.

He attributed the monthly rise in June to seasonal factors such as increased demand of purchase of foreign exchange for summer holidays.

The data is expected to decline over the coming months, supported by a strong economic recovery beating market expectations.

China witnessed 6.9 percent growth in the second quarter.

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