BEIJING: The flood of billions of dollars out of China slowed dramatically in the second quarter, official figures showed Thursday, despite the yuan’s persistent weakness making it less attractive to hold.

“Cross-border capital outflow pressures have gradually eased,” Wang Chunying, spokeswoman for the State Administration of Foreign Exchange (SAFE), said at a briefing.

Foreign exchange settlement data showed Chinese banks sold $49bn more in foreign currency than they received between April and June.

That “narrowed sharply” from $124.8bn in the January-March period, she said.

The monthly figures were even more dramatic, with $12.8bn leaving in June, down from $54.4bn in January, she added.

Money has been flowing out of China in recent years as its growth has slowed, adding to downward pressure on its currency and making yuan-denominated assets less attractive to hold, in a vicious cycle for the world’s second-largest economy.

Authorities have tightened restrictions over cross-border money flows, including capping cash withdrawals overseas using domestic bank cards at 100,000 yuan ($15,000) per year from January and requiring banks to pay a 20 per cent deposit on forward sales of foreign exchange to stem speculation.

A forward sale is a commitment to sell at a predetermined price and date.

Published in Dawn, July 22nd, 2016