China’s forex market turnover surged, highlighting capital flight pressure
Turnover jumped 42 per cent to a record US$2.32 trillion last month as a faster falling yuan boosted demand for foreign exchange
Mainland China’s foreign exchange market showed substantially increased activity last month as faster yuan depreciation boosted demand for foreign currencies and led more businesses to tap into foreign exchange derivative markets for risk hedging.
Foreign exchange market turnover surged 42.33 per cent last month compared with October to a record US$2.32 trillion, State Administration of Foreign Exchange data released on Friday showed.
Turnover from January to last month was US$18.05 trillion, exceeding the US$17.76 trillion recorded for the whole of last year.
“The expectation for cheaper yuan has driven up the demand for foreign exchanges,” China Financial Futures Exchange chief economist Zhao Qingming said.
The yuan weakened 1.69 per cent against the US dollar last month alone, along with almost all other non-US dollar currencies, as the greenback gained strongly. The US dollar index surged more than 3 per cent last month on prospects of an interest rate increase from the United States Federal Reserve and rising inflationary expectations after Donald Trump won the presidential election. Stronger inflation in turn means a faster space of monetary tightening by the Fed next year.
