China’s forex reserves fall due to normal market operations
Print Edition
DECLINE in China’s foreign exchanges reserves in August was due to its normal market operations and falling prices of major financial assets on the global market, the central bank said yesterday.
China’s forex reserves fell for a fourth straight month to US$3.56 trillion at the end of August, the People’s Bank of China said on Monday.
The PBOC attributed the drop partly to its market operations to provide enough liquidity, as commercial banks, companies and individuals held more foreign currencies following a sharp depreciation of the yuan last month.
On August 11, the PBOC decided to let the market have a greater say in the yuan’s central parity rate against the US dollar, leading to a depreciation of over 4 percent last month.
In August, Chinese companies and individuals saw holdings of foreign exchange deposits rise US$27 billion from July, PBOC data showed.
The central bank said drawings from commercial banks to make forex loans to companies and the declining value of major financial assets on the global market also contributed to the drop last month.
Against a strong US dollar, other major currencies including the euro and yen also depreciated last month, hurting the value of China’s forex reserves.
In the medium and long term, China will continue to see a medium-high economic growth pace and current account surplus, meaning the country will continue to enjoy abundant forex reserves, the central bank said.
“Rises and falls in forex reserves will be normal in the future,” the PBOC added.
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