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Forex reserves up for 7th straight month in August
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CHINA’S forex reserves rose for the 7th month in a row in August as the yuan gained strength and pressure of massive capital outflow eased, data from the central bank showed yesterday.
Forex reserves reached US$3.092 trillion by the end of August, up US$10.8 billion from a month earlier, according to the People’s Bank of China.
It is the first time the reserves have expanded seven months in a row since June 2014.
In an online statement, the State Administration of Foreign Exchange attributed the rise to stable cross-border capital flows and balanced supply-demand in the forex market.
“Climbing asset prices in the global financial market also pushed up the stockpile,” the statement said.
The US dollar weakened against most major currencies last month due to weak economic data and uncertainty over monetary policy moves, which drove up the value of non-dollar assets in China’s reserve holdings.
The dollar index, which measures the greenback against six major peers, dipped 0.3 percent last month, following a 2.89-percent drop in July.
There had been concerns over capital flowing out of the Chinese market in the second half of 2016, when the economy was facing looming downward pressures and the yuan was in the middle of a losing streak against the US dollar.
In January, China’s forex reserves had plunged below US$3 trillion, but as the economy stands on a firmer footing and the yuan continues to stabilize, the stockpile has increased steadily since February.
China’s economy grew 6.9 percent for the first half of 2017, with consumption and services, together with new innovation-driven economic sectors, taking up larger roles in the economy, prompting global institutions such as the IMF to raise GDP forecasts for the country.
Along with the improvements in the economy, the value of the yuan has been trending upwards.
The central parity rate of the yuan firmed 42 basis points to 6.5269 against the US dollar yesterday, up 6 percent from the start of the year, which shrugged off concerns of sharp depreciation.
Zhou Jingtong, a senior researcher with the international finance institute of the Bank of China, attributed the yuan’s rebound to a stabilizing economy, weaker US dollar and government curbs on capital flows.
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