The renminbi has strengthened by 3.4 per cent this year, a reversal from its record 6.5 per cent fall last year, in part reflecting central-bank efforts to squeeze bearish speculators.
Yet even as the government has staunched the immediate flood, there are signs that investor sentiment remains bearish over the medium term. A Reuters poll of 60 forex analysts in late July showed that they expect the renminbi to erase most of this year’s gains over the next 12 months.
In a sign that the government remains vigilant despite the improvements, regulators have imposed new measures in recent weeks to prevent capital flight.
Last week, the foreign exchange regulator named and shamed nine banks for violating foreign-exchange rules. The agency is also requiring banks to issue daily reports on all foreign bank-card purchases by customers’ worth more than Rmb1000 ($149) beginning later this month.
Meanwhile, foreign exchange reserves rose for a sixth straight month in July, according to data published on Monday, the longest run of increases since at 2014, when reserves touched a record high of $3.99tn. Forex reserves stood at $3.08tn at the end of July, up $24bn from a month earlier $80bn above January’s five-year low.