PBOC hints at retreat on dollar purchases
Reserves build-up no longer in China's favour, central bank deputy governor says, amid talk that the yuan's trading band could be widened
The People's Bank of China said the mainland does not benefit any more from increases in its foreign-currency holdings, adding to signs policymakers will rein in US dollar purchases that limit the yuan's appreciation.
"It's no longer in China's favour to accumulate foreign-exchange reserves," Yi Gang, a deputy governor at the central bank, said on Wednesday.
Stopping intervention [in the currency markets] will be very hard to do
Bank governor Zhou Xiaochuan had earlier said it would "basically" end normal intervention in the currency market and broaden the yuan's daily trading range.
Neither Yi nor Zhou gave a timeframe for any changes.
The mainland's foreign-exchange reserves surged US$166 billion in the third quarter to a record US$3.66 trillion, more than triple those of any other country and bigger than the gross domestic product of Germany, Europe's largest economy.
The increase suggested money poured into mainland assets even as developing nations from Brazil to India saw an exit of capital because of concern the United States Federal Reserve will taper stimulus.
Yi, who is also the head of the State Administration of Foreign Exchange, said the yuan's appreciation benefited more people on the mainland than it hurt.