CAPITAL flow into China slowed in November from a near record high in October, central bank data showed, which is expected to reduce the need for the People s Bank of China (PBOC) to conduct another imminent tightening.
The Position for Forex Purchases showed November inflow remained at a historically high level. To cushion the prospect that higher returns for funds will invite more speculative hot money into China, the central bank could resort to quantitative tools instead of interest rate increases in the medium term.
The PBOC and Chinese institutions spent 319.6 billion yuan (US$48 billion) to absorb foreign exchange flowing into China in November, down sharply from 519 billion yuan in October, the third largest since the data was published in the late 1990s.
But the November report, a key measure of capital inflow into China, was much higher than the 290 billion yuan in September and 243 billion yuan in August, according to Reuters calculations based on the latest data published by the central bank over the weekend.
China has seen a steady increase of capital inflow in the past decade as speculators bet on the country s rising prices of shares and property as well as the expected appreciation of the yuan against the dollar.
Slowing capital inflow in November reflects the stock market s 5.3 percent fall in the month after a 12.2 percent jump in October and the government s continued efforts to dampen high property prices. The yuan also fell in the second half of the month after hitting a multi-year peak in mid-November.(SD-Agencies)
