China's yuan funds outstanding for foreign exchange rebounded last month. The funds stood at 21.48 trillion yuan (3.39 trillion U.S. dollars) at the end of January, up by 4.48 billion yuan from the previous month, according to the People's Bank of China. The reading dropped 36.32 billion yuan month-on-month in December.

As the Chinese currency is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by China's trade surplus and foreign investment in the country, adding funds to the money market.

Such funds are an important indicator of cross-border foreign capital flows and domestic yuan liquidity. An increase in the funds usually signals eased capital flight pressure, while a decrease often means higher capital flight pressure.

The rise of the funds was in line with the upward trend of foreign exchange reserves, which rose for the 12th straight month to reach 3.1615 trillion U.S. dollars at the end of January.

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