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China to let foreign central banks trade in forex market

[BEIJING] China will allow foreign central banks to trade in its spot interbank foreign exchange market and trade currency derivatives such as swaps and forwards, the central bank said on Monday.

The central bank also commented on a big discrepancy of 405.4 billion yuan (S$89.59 billion) between two sets of official data that are proxy indicators of the demand for foreign currencies in China.

In an online question and answer statement, the central bank said the gap was due to "ample" foreign exchange liquidity in the banking system.

A Reuters calculation of central bank data released on Monday showed China's financial institutions sold a net 723.8 billion yuan of foreign exchange in August, the largest outflow on record.

But separate central bank data showed the bank sold a net 318.4 billion yuan of foreign exchange last month.