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Chinese banks back to net forex sale

(Xinhua)

13:57, May 25, 2012

BEIJING, May 25 (Xinhua) -- Chinese banks sold more foreign currency than they bought for clients in April after posting net foreign exchange purchases for three months, showing abating expectations for a stronger yuan, China's forex regulator said Thursday.

Chinese lenders bought $110.2 billion on behalf of clients in April and sold $113.9 billion, resulting in a net sale of $3.7 billion, the State Administration of Foreign Exchange (SAFE) said in a statement.

It was the first net forex sale this year following net purchases of $19.4 billion in January, $4.4 billion in February and $7.8 billion in March.

The figure indicates that companies and individuals have become more willing to hold foreign currency, as expectations for the yuan's appreciation have eased, said Zhao Qingming, a senior researcher from China Construction Bank.

The change of expectations was due to China's slowing economy and a stronger US dollar favored by investors amid worries over the European sovereign debt crisis, Zhao said.

In the first four months, Chinese banks bought $480.4 billion in foreign currency on behalf of clients and sold $452.5 billion, bringing the net purchase volume to $27.9 billion, according to the SAFE statement.

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