China sees no major forex withdrawal: regulator

BEIJING - Chinese banks bought less foreign exchanges than they sold in its bank-to-client forex transactions in June, registering a deficit of $400 million, latest data showed Monday.

It is the first such deficit since September, according to the State Administration of Foreign Exchange (SAFE).

Bank-to-client foreign exchange transactions are a major source of fluctuation in China's foreign exchange reserves.

The administration denied any signs of a major forex withdrawal and said the country's forex is expected to stabilize amid fluctuations in the second half of the year.

Foreign exchange inflows to China have been slowing since May due to a variety of factors, a SAFE official said.

With the US Federal Reserve poised to phase out quantitative easing, the world's major emerging economies, including China, have witnessed a depreciation in their currencies, retreats in their stock markets and capital outflows since May.

Moreover, the amount of inflows to China has also been significantly lowered due to a series of measures taken by financial institutions over the past several months in order to reduce currency speculation disguised as export trade.

Despite the slowing trend seen in capital inflows, a continuous and wide-scale outflow of foreign capital in China is unlikely, the official said, adding that the country's cross-border capital will become stable amid fluctuations in the second half of the year.

In the first half of the year, Chinese banks bought more foreign currency from clients than they sold, creating an exchange surplus of $138.4 billion, SAFE said.