Chinese more willing to keep foreign currencies

 BEIJING, Aug. 24 (Xinhua) -- Chinese people were more willing to keep foreign currencies and sell their yuan-denominated assets in July, data from the State Administration of Foreign Exchange (SAFE) has indicated.

Individuals and institutions exchanged 127.5 billion U.S. dollars in foreign currencies for Renminbi through Chinese banks, while buying 127 billion U.S. dollars of foreign currencies from financial institutions during the month. This resulted in a foreign exchange surplus in banks of 500 million U.S. dollars, according to SAFE.

Although Chinese banks swung back to a foreign exchange surplus in July from a 3.6-billion-U.S.-dollar deficit¹ in June, the amount of surplus has narrowed sharply from 5.1 billion dollars in May, 7.8 billion in March, 4.4 billion in February and 19.4 billion dollars in January.

The banks reported a foreign exchange deficit of 3.7 billion U.S. dollars in April.

Zhao Qingmin, a financial researcher with the China Construction Bank, said banks will no longer see huge foreign exchanges surplus as the market expects the yuan to devalue in the coming months.

"Now the Chinese enterprises and residents are more willing to keep their wealth in foreign currencies due to such a market expectation," Zhao said.

After the yuan's central parity² hit a record high of 6.267 against the U.S. dollar on May 2 this year, the Chinese currency weakened by about 646 basis points, as of Friday, according to data from the China Foreign Exchange Trading System.

A separate report by the Institute for Financial Studies of Shanghai-based Fudan University said the yuan has weakened by about 0.88 percent against the greenback in the second quarter, marking the Renminbi's largest quarterly devaluation since 1994.

Compared with these spot market figures, forward contracts, which reflect investors³' outlook towards the relative value of the Renminbi, showed they chose to convert their assets in foreign currencies as the yuan weakens.

In July, companies and individuals signed forward contracts with Chinese banks to buy 15.2 billion U.S. dollars in foreign currencies at a future date agreed by both sides. At the same time, investors agreed with banks in their forward contracts to exchange 11.8 billion U.S. dollars.

In the first seven months, the banks posted a cumulative⁴ deficit of 8.8 billion U.S. dollars in foreign exchange in forward contracts. This has raised concerns that an outflow of funds might be under way in the world's second-largest economy.

Zhao said the buildup of banks' foreign exchange deficit showed some enterprises tried to purchase currency forward contracts to manage their exchange rate risks and hedge against the yuan's devaluation.

In the January-July period, overseas business-related proceeds of domestic institutional and individual clients via banks totaled 1.44 trillion U.S. dollars, with 1.35 trillion U.S. dollars paid to overseas businesses, SAFE data showed.

Banks' forex surpluses, which make up part of China's foreign exchange reserves along with current account surpluses and foreign direct investment inflow, do not include banks' own foreign exchange transactions or interbank transactions, according to SAFE.

1 deficit   

n.亏空，亏损；赤字，逆差

参考例句：

• The directors have reported a deficit of 2.5 million dollars.董事们报告赤字为250万美元。
• We have a great deficit this year.我们今年有很大亏损。

2 parity   

n.平价，等价，比价，对等

参考例句：

• The two currencies have now reached parity.这两种货币现已达到同等价值。
• Women have yet to achieve wage or occupational parity in many fields.女性在很多领域还没能争取到薪金、职位方面的平等。

3 investors   

n.投资者，出资者( investor的名词复数 )

参考例句：

• a con man who bilked investors out of millions of dollars 诈取投资者几百万元的骗子
• a cash bonanza for investors 投资者的赚钱机会

4 cumulative   

adj.累积的，渐增的

参考例句：

• This drug has a cumulative effect.这种药有渐增的效力。
• The benefits from eating fish are cumulative.吃鱼的好处要长期才能显现。