PBOC buys large amounts of forex in March

China's central bank bought large amounts of foreign exchange in March, leading to the recent devaluation of the yuan, according to the latest data.

The central bank's new yuan funds outstanding for foreign exchange added 174.2 billion yuan (27.9 billion U.S. dollars) in March from the previous month, according to data released by the People's Bank of China (PBOC) on Wednesday.

The figure was close to the total new funds outstanding for foreign exchange for all Chinese financial institutions, which stood at 189.2 billion yuan in March, the PBOC said.

The central bank's heavy purchase of foreign currency from commercial banks and sales of the yuan increased the supply of the Chinese currency on the market and led to a decrease in the yuan's value, according to experts.

Yu Yongding, an economist at the Chinese Academy of Social Sciences, said the central bank's move was the main cause of the recent yuan devaluation against the U.S. dollar.

"It was aimed at driving away speculators betting on the one-way appreciation of the yuan," said Yu.

Yang Weijiao, an analyst with Lianxun Securities, said the measure was in line with a widening of the yuan trading band by the central bank in mid-March and affected the yuan's movements.

The yuan's exchange rate against the U.S. dollar declined about 3.5 percent in the first four months of the year.