Chinese commercial banks reported a significant drop in net foreign exchange sales in the first quarter as cross-border capital flows remained balanced and stable, the country's forex regulator said Thursday.
Chinese lenders bought 434.2 billion U.S. dollars of foreign currency and sold 452.5 billion dollars from January to March, resulting in net sales of 18.3 billion dollars, according to Wang Chunying, spokesperson for the State Administration of Foreign Exchange.
This represented a 55-percent drop compared with net forex sales volume in the same period last year, Wang told a press conference.
In March alone, commercial banks saw net forex sales of 9.2 billion dollars.
Forex supply and demand has been basically balanced so far this year, Wang said, noting that market entities were more willing to borrow forex loans instead of buying foreign currencies from banks.
In line with the forex sales data, China's forex reserves rose to 3.14 trillion dollars at the end of March, 2.9 billion dollars higher than three months previously.
Wang said she expected to see a generally balanced two-way cross-border capital flow this year, supported by domestic policies and economic fundamentals as well as the global economic recovery.
She noted that uncertainties still existed in the external environment, citing a pick-up in international financial market fluctuations this year.
"But we believe that the stability factors are more dominant," she said.
Wang said monetary policy normalization in major economies would be inevitable if global economy continues recovering, but its impact on China would be controllable.
"The adjustments in monetary policy will be a mild and gradual process and are currently in different stages for the major economies, which could help avoid draining global liquidity too quickly," Wang said.
"Given China's sound economic fundamentals, the forex market was now more adapted to external changes and able to handle influences from the international market, as Chinese market entities are trading more rationally with stronger risk awareness," she said.
