China sells net 723.8 bln yuan of FX in Aug, record monthly outflow

[SHANGHAI] China's central bank and commercial banks sold a net 723.8 billion yuan (US$113.69 billion) of foreign exchange in August, by far the largest outflow on record, according to a Reuters calculation based on central bank data released on Monday.

The previous largest outflow, last month in July, totalled 249.1 billion yuan (US$39.13 billion).

On Aug 11, People's Bank of China surprised global markets by announcing a new fixing mechanism for the yuan against the dollar and abruptly devaluing the currency by nearly 3 per cent.

In the wake of the policy change, capital outflows have intensified and the central bank has spent large sums of foreign exchange defending the currency. In August, China's foreign exchange reserves fell by US$94 billion, also a record.

REUTERS