Net capital outflows from China’s banks totaled US$109 billion in the year’s first quarter as money flowed to overseas banks, Reuters reported, citing a quarterly review by the Bank for International Settlements. Central bank reserves declined by a record US$94 billion in August and authorities recently instructed banks to bolster management of foreign exchange transactions and pay attention to suspicious transactions. China devalued the yuan on August 11 by changing the mechanism that sets its trading band against the US dollar, and has been spending heavily to hold the currency steady onshore as fears have grown that the economy is in worse shape than previously thought.
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