The foreign exchange settlement and sales deficit for Chinese banks reached USD$7.5 billion in November, for a sizeable reverse compared to the surplus posted the month previously.
Data from China’s State Administration of Foreign Exchange indicates that banks posted a foreign exchange settlement and sales deficit of 49.7 billion yuan (approximately USD$7.5 billion) in November, for a sharp decline compared to the surplus of 18.3 billion yuan posted in the previous month.
According to the Chinese central bank market actors saw a year-on-year rebound in their willingness to settle foreign exchange in November, while their willingness to engage in purchases of foreign exchange declined.
Foreign exchange traders have said that a key reason for the November settlement and sales deficit was seasonal factors, with enterprises facing a peak in their overseas payments as the end of the year approaches.
Another key factor was the pressure brought to bear by hawkish interest rate hikes on the part the US Fed, as well as the launch of Trump’s tax reforms, prompting Chinese companies to expand the vigour of their currency forwards.