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BEIJING, Oct. 18 (Xinhua) -- China's central bank saw its yuan funds outstanding for foreign exchange drop 337.5 billion yuan (50.15 billion U.S. dollars) to 22.91 trillion yuan in September, data showed on Tuesday.
It was the largest monthly drop this year and marks the 11th consecutive month of declines, suggesting increasing capital flight pressure.
As the Chinese currency is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by China's trade surplus and foreign investment in the country, adding funds to the money market. Such funds are an important indicator for foreign capital flow in and out of China as well as domestic yuan liquidity.
Concerns about capital outflows had been on the rise as the economy slowed, the possibility of a U.S. rate hike loomed and the Chinese currency had fallen since China revamped its forex mechanism last year.
China's forex reserves fell to 3.17 trillion U.S. dollars at the end of September, the third consecutive monthly drop. Han Huishi, a China Construction Bank analyst, blamed the drop on short-term factors, and noted that China might have sold some forex reserves to stabilize the yuan ahead of the SDR inclusion.
Purchases of foreign currency by Chinese residents ahead of the week-long national holiday, which ended Oct. 7, are another reason for the fall in reserves, Han said. Enditem
