China banks' June net forex sales plunge 62%

Dramatic drop suggests accelerating capital outflow.

The People’s Bank of China, the central bank, and financial institutions sold a net US$6.71 billion worth of foreign currency in June compared to US$10.9 billion in May.

Dow Jones Newswires said the swing to net sales in June after six months of net purchases suggests capital has started to flow out of China.

The banking system's foreign currency purchase position stood at US$4.46 trillion in June, lower than the US$4.47 trillion in May, according to PBOC data.

This total includes purchases and sales by commercial banks and other financial institutions but mostly reflect transactions by the central bank.

Analysts see the figures as a proxy for inflows and outflows of foreign capital since most foreign currency entering the country is generally sold to PBOC.