China’s foreign-exchange reserves, the world’s largest foreign currency hoard, slipped to the lowest level since 2011 as the central bank continued its defence of the currency.
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Due to concerns over a weak yuan and capital outflows, China’s forex reserves have been in broad decline since last November, but reserves returned to growth in March due to signs of stabilizing economy.
BEIJING, Sept 7 China’s foreign exchange reserves fell to $3.19 trillion in August, central bank data showed on Wednesday, in line with market expectations and the lowest level since December 2011.
The PBoB has stepped in via state-run banks since mid-July to slow the pace of depreciation in the yuan, which has weakened 2.6 percent against the USA dollar so far this year. Outflow pressures have increased again as some Federal Reserve officials have signaled that they may raise the main interest rate as early as this month. “The pressure is relatively small compared with last year and large-scale capital outflows should be over. partly because capital controls are stricter than last year”.
Economist Julian Evans-Pritchard at Capital Economics said the PBOC was intervening heavily to prop up the currency and that ouflows were likely to continue to weigh on the yuan. On Wednesday it was trading around 6.66.
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China’s foreign exchange reserves, largest in the world, fell for the second consecutive month to United States dollars 3.185 trillion in August, the lowest in six years as the yuan faced renewed pressure after the USA hinted it might raise interest rates, officials said on Wednesday.
