Banks in Shanghai and Shenzhen told to limit dollar sales, report says
Chinese banks were restricting US dollar purchases by their customers, with officials having issued verbal instructions to that effect to lenders in Shenzhen, according to the Financial Times.
The news followed figures published on 7 January showing that China's FX reserves fell by $108bn to $3.3trn in December after a $87bn drop in November, as a result of capital outflows.
Taking into account the impact of changes in currency valuations, Goldman Sachs estimated the drain may have been an even larger $130bn, with the prior month's tally coming in at $40bn.
Amid "fierce" demand for greenbacks from households and companies the country's foreign exchange regulator issued verbal instruction to banks in Shanzhen telling them to limit dollar buying, according to a person with knowledge of the situation cited by the newspaper.
“They’re focused on Shenzhen and Shanghai because that’s where demand has really spiked,” said the person.
The FT also referenced a report in the Shanghai Securities News according to which client managers at banks in Shenzhen including Industrial and Commercial Bank of China and Bank of China said demand for dollars had risen sharply since the start of the year.