China's c.bank - commercial banks' reserve conversions boosted its net FX purchases

Rainforest Resources

04/01/2023 13:33

SHANGHAI, Jan 4 (Reuters) - People's Bank of China
(PBOC) said on Wednesday that a high amount of foreign currency
it has bought recently was a result of commercial banks
converting their foreign exchange holdings with the central bank
into yuan reserves.
    China's central bank bought a net 63.6 billion yuan ($9.24
billion) worth of foreign exchange in November，according to
Reuters calculations based on PBOC data released earlier on
Wednesday, marking the biggest net purchases since October 2014.
    The PBOC said it allowed in 2007 and 2008 some commercial
banks to use their foreign exchange funds to replace yuan
deposits as part of the reserves they kept with the central
bank.
    "Starting from 2008, some commercial banks have voluntarily
swapped such FX funds into their deposit reserves in yuan," the
central bank said in an online statement.
    "Recently, some commercial banks continued to replace the
remaining foreign exchange funds," it added, noting such
operations resulted an increase in the central bank's net
currency purchases from commercial banks and was reflected in
its balance sheet.
($1 = 6.8830 Chinese yuan renminbi)
 (Reporting by Winni Zhou and Brenda Goh
Editing by Tomasz Janowski)
 ((winni.zhou@thomsonreuters.com; +86 21 2083 0100; Reuters
Messaging: winni.zhou.thomsonreuters.com@reuters.net))