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China's forex reserves down slightly in July

CHINA'S foreign exchange reserves dropped slightly in July as downward pressure eased thanks to a stronger yuan, the Chinese currency.

Forex reserves stood at US$3.201 trillion at the end of July, down from June's US$3.205 trillion, according to data released Sunday by the People's Bank of China (PBOC), the central bank.

The data was basically in line with market forecasts.

The reserves have been stable as a stronger yuan meant that the PBOC did not have to resort to using foreign exchanges to prop up the currency, and capital outflow also lessened, analysts said.

The yuan strengthened against a basket of currencies last month.

Its exchange rate composite index, which measures yuan's strength relative to currencies including the US dollar, euro and Japanese yen, came in at 95.34 at the end of July, from 95.02 a month earlier, according to financial services provider China Foreign Exchange Trade System.

China's forex reserves had been on a losing streak since November 2015 due to concerns over a weak yuan and capital flight, even slipping to a almost-five-year low of 3.19 trillion U.S. dollars in May.

But the trend quickly returned to growth as signs of stabilizing economic growth relieved market concerns. In June, there was an unexpected rise of 13.43 billion U.S. dollars.

China's reserves remain the largest in the world.

The country still has abundant forex reserves that can help fend off risks from cross-border capital flows, Wang Chunying, spokesperson of the State Administration of Foreign Exchange, said in late July.

In July, forex reserves denominated in Special Drawing Rights (SDRs), an international reserve asset, rose to 2.297 trillion SDRs from 2.291 trillion in the previous month, the PBOC data showed.

China's official gold reserves grew to 78.89 billion U.S. dollars, up from 77.43 billion in June.


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