China’s foreign exchange reserves, the largest in the world, dropped by United States dollars 87.2 billion to USD 3.44 trillion in November amid a slowdown of besides surge in its outbound direct investment (ODI).
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The value of China’s gold reserves stood at $59.52 billion at the end of November, down from $63.26 billion at the end of October, the People’s Bank of China (PBOC) said on its website.
A rise in offshore interest rates due to the increase probability that the US Federal Reserve would hike rates when it met on 15-16 December probably also added to the outflow pressures, the economist explained.
But Julian Evans-Pritchard, an analyst with research firm Capital Economics, estimated China’s net capital outflows at a “record” US$113 billion in November, spiking from US$37 billion in October, including the central bank having to sell US$57 billion to prop up the value of the Chinese currency. Analysts including those at Goldman Sachs Group Inc. forecast a depreciation next year as capital heads overseas, the economy slows and the central bank reduces support.
Capital outflows from the People’s Republic of China picked up significantly in November, but that does not foreshadow a “significant” weakening in the currency, according to one think-tank. Since August, the yuan has fallen 3.2 percent against the dollar, while the greenback has gained over 2.5 percent against a basket of major currencies. That was the lowest level since February 2013, when reserves hit $3.395…
For its part the central bank has repeatedly said it sees no reason for the currency to depreciate further.
China’s International Monetary Fund (IMF) reserve position was at $4.60 billion, down from $4.64 billion the previous month.
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But the foreign currency reserves remain by far the world’s largest.
