Net forex purchases for fourth month

The deficit means that money inflows under capital accounts have increased compared with previous months, said Ding Zhijie, dean of the School of Banking and Finance at the University of International Business and Economics.

"It proves that capital inflow pressure has sustained since Japan announced quantitative easing policies, and yuan appreciation expectation remains strong."

On Monday, the PBOC, or the central bank, set a weaker reference rate at 6.2415 per dollar. The yuan later strengthened 0.08 percent to 6.1826 per dollar in Shanghai, according to the China Foreign Exchange Trade System.

The currency gained 0.24 percent last week, the most since the period ended Oct 14, according to data compiled by Bloomberg.

The spot yuan touched a record high of 6.1723 per dollar last Wednesday when the central bank set its midpoint at the strongest level of 6.2342.

Apart from international "hot money" inflows, the rising willingness of Chinese enterprises, especially property developers, to sell dollar-denominated bonds in overseas markets also contributed to increasing cross-border money inflows, Ding said.

"Money collected through such bond sales in the first quarter has exceeded that of the full 2012."

He said the ongoing capital inflows would continue for a while as the difference between financing costs in China and overseas has further widened.

According to central bank data, in the first quarter China's stock of foreign exchange reserves rose by $130 billion, in contrast with the fourth quarter's increase of $25 billion.

From January to March, China reported a trade surplus of nearly $43.1 billion, compared with $210 million during the same period in 2012.

The expectation of the yuan's appreciation has strengthened as China's band-widening discussions heated up again following recent comments from the PBOC officials that the yuan trading band will be further widened "in the near future".