China’s commercial banks recorded a net foreign exchange purchase of 92.6 billion yuan in May, according to data from the State Administration of Foreign Exchange (SAFE). That’s roughly $12.8 billion worth of net buying pressure on the foreign currency side.
Net forex purchases represent the gap between what banks settle (buying foreign currency on behalf of clients) and what they sell (converting foreign currency back into yuan). A positive net figure means more money is flowing out of yuan and into foreign currencies.
In April, total bank forex settlements reached approximately 1,767.3 billion yuan, while total forex sales came in at around 1,492.0 billion yuan. Those are enormous sums, reflecting the sheer volume of trade-related currency conversion happening every month in a country that remains the world’s largest goods exporter.
The People’s Bank of China (PBOC) and SAFE together oversee the country’s foreign exchange reserves and currency management policies. A consistent pattern of net forex purchases by commercial banks gives both agencies useful signal on where pressure is building.
Why demand for foreign currency stays strong
