Capital Flight Puts Pressure on Yuan as China Sees Fastest Outflows in Over 7 Years

Capital is exiting China at the fastest pace in over 7 years, putting pressure on the yuan. Outflows intensified in recent weeks amid real estate woes.

Banks sold a net $19.4 billion in foreign currencies in September, the most since 2018. They also sent $53.9 billion overseas for clients.

Goldman Sachs pegs September outflows around $75 billion, the most since late 2016. This is weakening the yuan.

Outflows reflect interest rate differentials between China and abroad. The gap with the US is the widest in over 20 years.

China saw outflows from both the current and capital accounts in September. Factors include service deficit, slump in investment, and securities outflows.