Goldman Sachs China: SAFE data suggest some FX inflows in June
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Key Views
The portfolio channel shifted to a net outflow of USD 4 billion, reversing May's net inflow of USD 7 billion. Northbound Bond Connect saw net outflows of USD 2 billion, compared with USD 13 billion in inflows in May, primarily driven by negotiable certificate of deposit (NCD) sales. Official FX reserves declined from USD 3,442 billion in May to USD 3,416 billion in June; however, adjusting for an estimated USD 26 billion in negative valuation effects, reserves were broadly unchanged. Commercial bank net external assets increased by USD 26 billion to USD 1,532 billion.
Outlook
June FX inflows remained positive but narrowed month-over-month, with a structural divergence between robust current account inflows and portfolio outflows. The report does not provide explicit forward forecasts. No specific securities are recommended.
Key exhibits
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