FXstreet.com (Barcelona) - According to the NAB Analyst Team, “Foreign investors are increasingly turning sour on the Chinese economy and RMB, helping to keep the value low – potentially providing some support to exports.”
The foreign currency reserves fell noticeably in the June quarter (-$US65 billion), pointing to an acceleration of hot money outflows, with the country reporting its first BoP deficit since the Asian Financial Crisis of the late-1990s. Chinese banks were also net sellers of RMB in the previous month (RMB3.8 billion), and have purchased significantly less RMB in 2012 than they did last year.
“This demonstrates that exporters and investors are becoming reluctant to convert their dollars into yuan – these capital outflows are also contributing to the tight liquidity conditions currently experienced.” writes the Team.
The foreign currency reserves fell noticeably in the June quarter (-$US65 billion), pointing to an acceleration of hot money outflows, with the country reporting its first BoP deficit since the Asian Financial Crisis of the late-1990s. Chinese banks were also net sellers of RMB in the previous month (RMB3.8 billion), and have purchased significantly less RMB in 2012 than they did last year.
“This demonstrates that exporters and investors are becoming reluctant to convert their dollars into yuan – these capital outflows are also contributing to the tight liquidity conditions currently experienced.” writes the Team.
