China’s foreign exchange reserves declined by US$99.5 billion in January to US$3.23 trillion after a record fall the previous month.
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China’s foreign exchange reserves fell in February to their lowest level since 2011, as the central bank continued to shore up the weakened yuan.
Foreign exchange reserves dropped by USD28.6 billion to USD3.2 trillion in February.
Chinese regulators plan to impose new rules to end the practice of homebuyers taking out loans to cover down-payments, as they step up financing risk in the property market, according to people familiar with the matter.
The study in the regular quarterly report by the central banks’ central bank also said that capital flight from the yuan, also known as renminbi, had tended to be about the repayment of dollar-denominated debt by Chinese companies rather than widespread sales of mainland assets. “Equally important, the market has quickly downgraded expectations for a rapid lift-off (in interest rates) by the U.S. Federal Reserve”.
Reserves have shrunk by US$762 billion since mid-2014, more than the gross domestic product of Switzerland.
In an attempt to dispel such worries, PBOC Gov. Zhou Xiaochuan reiterated to global financial policy makers at a Group of 20 meeting late last month that China won’t engage in competitive devaluation of its currency to lift its exports, and that “there is no basis for persistent yuan depreciation from the perspective of economic fundamentals”.
Earlier today Yi Gang, the vice governor of the People’s Bank of China (PBOC), told reporters in Beijing that the nation’s currency reserves were “stable”.
That might point to a reduction of the pressure that has forced China to use hundreds of billions its huge foreign currency reserves to fend off deeper devaluation of the currency.
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China’s foreign reserves are diversified, he said, reflecting China’s trade, investment and payment structures.
