The latest data from China’s State Administration of Foreign Exchange indicates that Chinese banks saw a major diminution in their foreign exchange settlement deficit in the first half of the year.
Chinese banks purchased a total of USD$772.7 billion in foreign exchange in the first half of 2017, and sold a total of $866.5 billion during the same period, for a foreign exchange settlement deficit of approximately $93.8 billion.
Calculated in US dollars, this translates into a year-on-year increase in bank forex purchases of 6%, and a decrease in sales of 4%, for a decline in the forex settlement deficit of 46%.
According to SAFE supply and demand on China’s forex market has been essentially balanced since February, while domestic enterprises have steadily increased their use of forex for financing purposes following marked declines in overseas exchange rates.
SAFE expects supply and demand on the market for forex to remain balanced, driving an ongoing increase in China’s foreign reserves.
As of the end of June 2017 China had $3.0568 trillion in foreign reserves, for an increase of $46.3 billion since the start of 2017, and five months of consecutive increase from February to June.