(Adds official bond holdings data)
BEIJING, April 21 (Reuters) - Foreign investors
increased their holdings of China's onshore yuan bonds in March,
the foreign exchange regulator said on Friday, expecting more
capital inflows amid signs of economic recovery.
A retreat in the U.S. dollar, a shrinking yield gap between
the world's two largest economies and signs that China's economy
is improving all contributed to foreign capital inflows, the
regulator said.
"China's economy will continue to rebound and the opening up
of the financial markets will be steadily promoted, and there is
still room for foreign capital inflows," said Wang Chunying,
spokesperson of the State Administration of Foreign Exchange
(SAFE).
Wang said that proportions of foreign investment in both
bonds and stocks remained relatively low.
Global institutional investors increased their holdings of
Chinese onshore bonds traded in the interbank market in March by
10 billion yuan ($1.45 billion) to 3.21 trillion yuan, official
data from the central bank's Shanghai head office showed on
Friday, snapping two straight months of outflows.
China's economy grew at a faster-than-expected pace in the
first quarter, as the end of strict COVID curbs lifted
businesses and consumers out of crippling pandemic disruptions,
although headwinds from a global slowdown point to a bumpy ride
ahead.
Separately, the FX regulator also pledged to fend off risks
from external market shocks while "making every effort" to
maintain prudent operations of the foreign exchange market and
financial safety.
"We've seen there are still unstable and uncertain factors
in the external environment," Wang said, adding the regulator
will continue to monitor and analyse impact from various
factors, and improve its macro-prudential management and tool
box.
It also said that the regulator will deepen FX reforms and
push forward with opening up its capital account.
($1 = 6.8944 Chinese yuan)
(Reporting by Beijing Newsroom and Tina Qiao; Editing by
Muralikumar Anantharaman and Kim Coghill)
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