ALSO READChina unveils fresh steps to curb capital outflows, spur inflows Exclusive - China ready to slow yuan descent, worried about capital outflows - sources Exclusive - China ready to slow yuan descent, worried about capital outflows-sources China forex regulator tightens controls to stem capital outflows, sources say China steps up capital controls, tightens investment rules for state firms
Less pressure from outflows has helped steady the yuan currency this year and brought China's foreign currency reserves back over the closely watched $3 trillion mark.
Expectations for further yuan depreciation have weakened significantly, State Administration of Foreign Exchange (SAFE) spokeswoman Wang Chunying told a news conference.
Net foreign exchange sales by China's commercial banks fell sharply in the first quarter after policymakers tightened supervision on money leaving the country and as a weaker U.S. dollar took pressure of the yuan and other emerging currencies.
Net sales of foreign exchange by Chinese commercial banks dropped to $40.9 billion in the first quarter, compared with $124.8 billion in the first quarter of 2016 and $337.7 billion in sales last year, SAFE data showed.
The yuan slumped around 6.5 percent against the surging dollar last year, but has firmed nearly 1 percent so far in 2017 at the dollar recoiled, defying -- for now -- many analysts' expectations of further weakness.
China's improving economy has also helped support the currency even as the U.S. central bank raises interest rates, Wang said. The economy grew at the strongest pace since mid-2015 in the first quarter.
Premier Li Keqiang said on Tuesday that market confidence in the yuan has significantly improved, Xinhua news agency reported.
Sources told Reuters on Wednesday that China's central bank has relaxed some of the curbs on cross-border capital outflows, the first signs of easing of measures put in place last year as authorities and financial markets feel more confident that pressure on the yuan has eased.
As the yuan fell against the dollar and capital outflows accelerated late last year, the government stepped up capital controls, making it harder for individuals and companies to move money out of China.
Non-financial outbound direct investment from China tumbled 48.8 percent in the first quarter year-on-year, with dealmakers saying many Chinese firms are unable to close deals because they cannot secure official permission to transfer yuan into foreign currency.
(Reporting by Kevin Yao and Cheng Fang; Writing by Elias Glenn; Editing by Joseph Radford and Kim Coghill)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)