China’s forex reserves drop below US$3 trillion for first time in six years
Reserves dropped by US$12.3 billion last month, a smaller fall than December, but larger than expected
China’s foreign exchange reserves have dropped below the psychological level of US$3 trillion for the first time since February 2011.
The reserves fell by US$12.3 billion last month, a smaller decline than in December, but still larger than expected in light of strict capital account measures adopted at the end of last year and a falling US dollar.
The reserves stood at US$2.9982 trillion at the end of last month.
“The US$3 trillion threshold is more of a psychological thing,” Julian Evans-Pritchard, a China analyst at Capital Economics, said. “The capital outflows were largely eased given that yuan appreciation last month created a sign of two-way fluctuations and control measures were implemented strictly.”
China’s foreign exchange regulator tried to put a brave face on the figures released on Tuesday.
A statement from the State Administration of Foreign Exchange blamed seasonal factors for the larger than expected fall, including forex purchases for overseas travel and bond repayments.