China turns capital flight tap off

Thursday, 8 June 2017

Via Capital Economics:

 The latest rise in China’s foreign exchange reserves suggests that the People’s Bank (PBOC) became net buyer of FX for the first time in well over a year last month. This reflects an easing of capital outflows, which has allowed the PBOC to pare back support for the renminbi.

 The value of China’s foreign exchange reserves amounted to $3,054bn at the end of May, up $24bn from a month earlier. (See Chart 1.) The increase was larger than expected (the Bloomberg median was $3,046bn, our forecast was $3,030bn) and marks the first time since mid-2014 that the reserves have increased for four straight months.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.