FX.co ★ China faces massive financial outflow

According to Bloomberg, citing official sources, in April, Chinese banks sold a record amount of foreign currency, the most since late 2016.

Last month, capital outflows from China surged. Banks sold $36.7 billion worth of foreign currency to their clients. Experts consider this to be the highest level since December 2016.

Bloomberg reports that this happened when “exporters held back dollar conversion and residents snapped up foreign currencies for overseas travel.” Against this backdrop, investors preferred securities not denominated in the yuan.

In this situation, the current account balance failed to favor the yuan, which is not typical of China, known for its export surplus. According to the agency, banks transferred $29.5 billion abroad for client investments. This is the record sum in the last eight years.

Last week, the People's Bank of China (PBOC) made it easier to buy real estate. The regulator removed a floor on mortgage interest rates and lowered the minimum down payment ratio for first- and second-time home buyers. This measure aims to stabilize the country's real estate market.