IMF urges China to reveal data on derivative holdings

China's defence of the yuan depleted its foreign exchange reserves by US$513 billion (S$697 billion) last year.
China's defence of the yuan depleted its foreign exchange reserves by US$513 billion (S$697 billion) last year.PHOTO: AGENCE FRANCE-PRESSE

WASHINGTON • The International Monetary Fund (IMF) is pushing China to disclose data on holdings of derivatives that could shed light on more opaque methods of intervention in the yuan's exchange rate, the Wall Street Journal reported.

The Washington-based lender is seeking data on the People's Bank of China's (PBOC) total holdings of forwards and futures, a step that would be in line with the nation's pledge last year to adhere to certain IMF disclosure standards amid efforts to win reserve currency status for the yuan at the fund, the Journal said on Monday, citing unidentified people familiar with the matter.

Analysts at firms including Goldman Sachs have pointed to data in recent months showing a rise in holdings of forwards, suggesting it is part of a strategy to support the yuan without immediately draining China's foreign exchange reserves.

"It does suggest that the IMF feels that they are not getting the full picture," said TD Securities strategist Sacha Tihanyi. Having more data would help in understanding China's policy stance in financial markets, he said.

The IMF said in a statement that "we continue to monitor and discuss China's foreign currency reserves data and other data, in the course of our normal engagement with the authorities".

In a later statement, the IMF said China subscribed to the Special Data Dissemination Standard at the end of last year, and is disseminating its data accordingly, and that the fund has not asked for more information from China.

Many central banks around the world, including those in Thailand, Malaysia and India, have frequently disclosed such derivatives data to the IMF, the Journal reported.

Derivative holdings reported by the PBOC starting in December do not represent China's total positions, the publication said.

"China has less transparency in data and policymaking than many other large economies," said Mr David Loevinger, a former China specialist at the US Treasury. The nation is moving "bit by bit" to comply with the IMF's statistical standards, he said.

The PBOC launched a two- pronged attack on yuan speculators earlier this year, choking outflows from the mainland while mopping up the currency offshore. The defence of the yuan depleted its foreign exchange reserves by US$513 billion (S$697 billion) last year, the first annual drop since 1992.

PBOC governor Zhou Xiaochuan has said he is targeting a yuan that is not "completely free floating" and that, given the speed of the increase in capital inflows in the past, it is only natural that outflows should be quick as well.

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A version of this article appeared in the print edition of The Straits Times on March 23, 2016, with the headline 'IMF urges China to reveal data on derivative holdings'. Print Edition | Subscribe