China's cross-border capital inflows rise in Q2

China recorded an increased amount of cross-border capital inflows in the second quarter, which strengthened the currency and stabilized prices of yuan-denominated bonds and shares despite fluctuations in the global financial market, the nation's foreign exchange regulator said on Friday.

The settlement and sales of foreign exchange by banks showed a surplus of $78.6 billion in the first half this year, indicating that enterprises and individuals preferred to hold RMB-denominated assets, especially for onshore bonds and shares, the State Administration of Foreign Exchange (SAFE) showed in statistics released on Friday.

In June, however, the FX sales by banks for their clients exceeded the amount of FX settlement, recording a deficit of 21.7 billion yuan ($3.1 billion) - the first deficit since November 2019, according to the SAFE data.

The data reflected the demand and supply in the FX market maintained a generally stable equilibrium in the first half, although the surplus contracted since June mainly due to the quarterly dividends distribution in foreign-listed and foreign-invested enterprises, according to Wang Chunying, deputy head and spokeswoman of SAFE.

"Cross-border capital flows showed a generally stable trend, and the net inflows in the second quarter have increased," Wang said.

The RMB exchange rate index designed by the China Foreign Exchange Trade System increased by 0.7 percent in the first half this year, and foreign investors increased their holdings of onshore bonds and shares by $72.9 billion, SAFE reported.