Chinese banks’ greenback purchases via swaps from clients hit record high in Jan

CHINESE banks’ US dollar purchases via FX swaps from their clients hit US$50.9 billion in January, the highest level on record, official data from the foreign exchange regulator showed on Monday (Feb 26).

The data shows exporters are increasingly turning to the swap market to convert their overseas earnings and remittances into yuan, rather than outright US dollar selling, as they seek higher returns on US dollars and wait for better exchange rates.

Such a swap implies exporters give the banks their US dollars and receive yuan through a contract that reverses the transaction at maturity. REUTERS