SHANGHAI: China's yuan edged higher on Monday as traders cited corporate dollar selling, an indication that foreign exchange is flowing into China even as June data shows signs of capital outflows.
Spot yuan changed hands at 6.1272 per dollar near midday, 0.04 percent stronger than Friday's close of 6.1294.
The People's Bank of China (PBOC) set its official midpoint at 6.1767, or 0.08 percent stronger than Friday's 6.1817 to reflect a 0.5 percent dollar fall on Friday.
Traders said dollar sales in the domestic market had persistently outnumberd dollar purchases in recent few weeks, indicating that China may still see net capital inflows.
Such a phenomenon appears to contradict central bank data showing capital may be flowing out of China.
Data published over the weekend showed PBOC foreign exchange assets - one of the gauges used to judge capital flows - dropped by a net 9.1 billion ($1.5 billion) in June, compared with net increases every month earlier in the year.
"Judging from the yuan's market performance, the PBOC's FX assets are likely to return to the rising track again in July," said a trader at a Chinese commercial bank in Shanghai.
Still, traders said potential yuan appreciation was expected to be limited as growth in the world's second-largest economy slowed to an annual rate of 7.5 percent in the second quarter, down from 7.7 percent in the first quarter.
The government typically keeps the yuan's exchange rate relatively stable when the economy is weak, traders say.
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