IMF pushes China to disclose more currency data, WSJ reports

[BEIJING] The International Monetary Fund is pushing China to disclose data on holdings of derivatives that could shed light on more-opaque methods of intervention in the yuan's exchange rate, the Wall Street Journal reported on Monday.

The Washington-based lender is seeking data on the People's Bank of China's total holdings of forwards and futures, a step that would be in line with the nation's pledge last year to adhere to certain IMF disclosure standards amid efforts to win reserve-currency status for the yuan at the fund, the Journal said, citing unidentified people familiar with the matter.

Analysts at firms including Goldman Sachs Group Inc have pointed to data in recent months showing a rise in holdings of forwards, suggesting it's part of a strategy to support the yuan without immediately draining China's foreign-exchange reserves. Daiwa Capital Markets analyst Kevin Lai said earlier this month that using forwards helps avoid steeper reserve drops that would risk causing "panic" in financial markets.

"It does suggest that the IMF feels that they are not getting the full picture," TD Securities strategist Sacha Tihanyi said in an e-mail. Having more data would help the understanding of China's policy stance in financial markets, he said.

The IMF said in an e-mailed statement that "we continue to monitor and discuss China's foreign currency reserves data and other data, in the course of our normal engagement with the authorities." In a later e-mailed statement, the fund said that China subscribed to the Special Data Dissemination Standard at the end of 2015 and is disseminating its data accordingly, and that it hasn't asked for additional information from China.

Many central banks around the world, including those in Thailand, Malaysia and India, have frequently disclosed such derivatives data to the IMF, the Journal reported.

Derivatives holdings reported by the PBOC starting in December don't represent China's total positions, the publication said.

"China has less transparency in data and policy making than many other large economies," said David Loevinger, a former China specialist at the US Treasury and now an analyst at fund manager TCW Group Inc. in Los Angeles. The nation is moving "bit by bit" to comply with the IMF's statistical standards instead of doing it all at once, he said. "China's made a commitment to get there over time."

China's foreign-exchange stockpile, the world's largest, shrank by US$28.6 billion last month to US$3.2 trillion, the smallest decline since June. That was lower than the US$40.9 billion decrease predicted in a Bloomberg survey of economists, and compares with December's record drop of US$108 billion as the monetary authority supported the yuan.

The PBOC launched a two-pronged attack on yuan speculators earlier this year, choking outflows from the mainland while mopping up the currency offshore. The nation's defense of the yuan depleted its foreign-exchange reserves by US$513 billion last year, the first annual drop since 1992.

PBOC Governor Zhou Xiaochuan said at a conference on Sunday that he's targeting a yuan that's not "completely free floating" and that given the speed of the increase in capital inflows in the past, it's only natural that outflows should be quick as well.

BLOOMBERG