SHANGHAI (Reuters) – People’s Bank of China (PBOC) said on Wednesday that a high amount of foreign currency it has bought recently was a result of commercial banks converting their foreign exchange holdings with the central bank into yuan reserves.
China’s central bank bought a net 63.6 billion yuan ($9.24 billion) worth of foreign exchange in November，according to Reuters calculations based on PBOC data released earlier on Wednesday, marking the biggest net purchases since October 2014.
The PBOC said it allowed in 2007 and 2008 some commercial banks to use their foreign exchange funds to replace yuan deposits as part of the reserves they kept with the central bank.
“Starting from 2008, some commercial banks have voluntarily swapped such FX funds into their deposit reserves in yuan,” the central bank said in an online statement.
“Recently, some commercial banks continued to replace the remaining foreign exchange funds,” it added, noting such operations resulted an increase in the central bank’s net currency purchases from commercial banks and was reflected in its balance sheet.
($1 = 6.8830 Chinese yuan renminbi)
(Reporting by Winni Zhou and Brenda Goh; Editing by Tomasz Janowski)
