Yuan funds used for foreign exchange continues to fall

China's central bank saw its yuan funds used for foreign exchange fall 191.9 billion yuan (28.8 billion U.S. dollars) to 23.2 trillion yuan in August, official data showed Wednesday.

The drop, more than the 190.5 billion-yuan fall in July and the 97.7 billion yuan in June, was the 10th consecutive monthly decline.

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 of foreign capital flows in and out of China, as well as domestic yuan liquidity.

Concerns about capital outflows have been on the rise due to stronger market expectations for a U.S. rate hike, putting the Chinese currency under pressure.

The yuan weakened by 1.06 percent against a basket of currencies in August, according to data from the China Foreign Exchange Trade System.

Source : XINHUA