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China’s forex regulator says foreign outflows ‘under control’

HONG KONG : China’s foreign exchange regulator said on Wednesday the recent retreat of foreign investments from the country amid a weakening yuan was “well under control” and that Beijing would continue to open up both outbound and inbound investment channels.

Overseas investments in Chinese markets totalled just over 8 trillion yuan ($1.2 trillion) at the end of last year.

However, the country’s slowing economy, reeling under strict COVID-19 containment measures, and U.S. interest rate hikes have resulted in a surge in outflows in recent months, weighing on the currency.

The latest monthly flows data showed foreigners withdrew a net $17.5 billion from local shares and bonds in March.

Volatility in China’s financial markets and foreign investment into the country was “a natural response” in a “complicated context”, Wang Lei, Deputy Director-General, Capital Account Management Department, State Administration of Foreign Exchange (SAFE) told a virtual China capital market conference.

“We see that inflow and outflow are quite natural in securities investment. Everything has been well under control and I see this partial adjustment doesn’t change the overall balance of the cross-border capital flow(s) in China.”

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