China’s foreign exchange reserves fell for a fourth month in a row in October as the value of the US dollar rose.
The reserves shrank by US$45.7 billion to US$3.121 trillion, the State Administration of Foreign Exchange said on Monday.
The decline was well above a Bloomberg consensus forecast of US$33.9 billion and bigger than those of the previous three months. Forex reserves shrank by US$18.8 billion in September, US$15.89 billion in August and US$4.1 billion in July.
Capital Economics China economist Julian Evans-Pritchard said the decline had “more to do with valuation effects than increased intervention”.
Capital outflows remain substantial but probably eased last month
“Capital outflows remain substantial but probably eased last month,” Evans-Pritchard said.
The value of the US dollar against a basket of currencies rose 3.12 per cent in October, leading to a large valuation loss of non-US dollar denominated assets in China’s forex basket. The yuan fell 1.39 per cent against the US dollar last month alone.