Chinese banks back to net forex sale

Chinese banks sold more foreign currency than they bought for clients in April after posting net foreign exchange purchases for three months, showing abating expectations for a stronger yuan, China’s forex regulator said Thursday.

Chinese lenders bought 110.2 billion U.S. dollars on behalf of clients in April and sold 113.9 billion U.S. dollars, resulting in a net sale of 3.7 billion U.S. dollars, the State Administration of Foreign Exchange (SAFE) said in a statement.

It was the first net forex sale this year following net purchases of 19.4 billion U.S. dollars in January, 4.4 billion U.S. dollars in February and 7.8 billion U.S. dollars in March.

The figure indicates that companies and individuals have become more willing to hold foreign currency, as expectations for the yuan’s appreciation have eased, said Zhao Qingming, a senior researcher from China Construction Bank.

The change of expectations was due to China’s slowing economy and a stronger U.S. dollar favored by investors amid worries over the European sovereign debt crisis, Zhao said.

In the first four months, Chinese banks bought 480.4 billion U.S. dollars in foreign currency on behalf of clients and sold 452.5 billion U.S. dollars, bringing the net purchase volume to 27.9 billion U.S. dollars, according to the SAFE statement.

Xinhua