Banks' holdings to buy foreign currency grow

Chinese banks' yuan holdings to buy foreign currency rose for two straight months, indicating capital inflows continue and may further support expectations of yuan appreciation.

According to data released by the central bank on Friday, the holdings - an indicator of capital flows - increased by 21.6 billion yuan ($3.44 billion) to nearly 25.8 trillion yuan by the end of October.

The jump followed an increase of 130.6 billion yuan in September. Before that, the pile had been declining for two consecutive months. In August, it declined by 17.4 billion yuan.

The People's Bank of China, the central bank, has raised the reference rate of the yuan against the dollar for seven straight days as of Wednesday. The yuan set record highs for three straight days earlier this week, hitting the strongest level since China opened its domestic currency market in 1994.