Data due out this week could show a big drop in China's foreign exchange reserves, with Societe Generale last week predicting a decline of US$150 billion, compared with a drop of US$50 billion in July. It said the possible range of decline was quite wide, from US$100 billion to US$200 billion. One reason given for the estimate was an increase in onshore trading volume as the central bank stepped up its intervention to stabilise the yuan after its shock devaluation on August 11. "The increase in onshore trading volume most likely reflected incremental dollar selling by local and foreign entities that was ultimately absorbed by the People's Bank of China," Societe Generale analysts said in a report.
