China's new yuan loans expected to decline

China's new yuan-denominated lending is expected to drop in May, the China Securities Journal reported on Saturday.

Shenyin & Wanguo Securities has revised down its forecast of China's new yuan loans in May from 900 billion yuan (146 U.S. dollars) to 700 billion yuan, the report said.

Citing research by the Bank of Communications, the report said the estimated decline in new loans is rooted in weak credit demand from enterprises and dropped deposits amid faltering economic recovery.

But, it added, the rebound of housing transactions prevented the decline from diving.

To curb the fast increase in capital inflow, China's forex regulator has also strengthened oversight for the operations of traders and commercial banks to fend off risks brought by speculative funds seeking arbitrage, according to the report.

China's new yuan-denominated lending dropped to 792.9 billion yuan in April, down from 1.06 trillion yuan in March, according to the People's Bank of China.