The mainland’s foreign exchange reserves gained US$10 billion in March, in a sign of abating panic over the prospects of the world’s second biggest economy and the outlook of its currency. Foreign exchange reserves rose to US$3.213 trillion at the end of last month from US$3.202 trillion at the end of February, showed data released on the People’s Bank of China on Thursday. The figure, the first monthly rise since last October, followed a fall of US$28.6 billion in February. That compared with a record drop of US$108 billion in December and a similarly deep fall of US$99 billion in January. ‘It’s a kind of vicious cycle’: China’s foreign reserves fall by record US$108b in December While financial markets had been pricing a “crash landing” by China, they were now repricing for a “soft landing”, said Tim Condon, head of Asia research at ING in Singapore. “We had a significant improvement in investor sentiment, and I think that’s the story.” Condon said that China’s change of course in economic policies – including its leaders’ clear denial there would be any sharp weakening of the yuan and their avowed determination to keep the slowdown in check – had helped to calm the market. In terms of China’s foreign exchange reserves, the days of “monthly modest changes” would return, Condon said. The central bank said that since April 1, China had been publishing its foreign exchange reserve figure measured by Special Drawing Rights. The move is an apparent effort to boost the International Monetary Fund’s accounting unit as the yuan will be officially included as a component currency this year. Measured by SDR, China’s foreign exchange reserves were 2.28 trillion at the end of March, a fall from 2.32 trillion at the end of February. Beijing has confused yuan’s inclusion in International Monetary Fund’s Special Drawing Rights with winning a beauty contest Earlier indicators for March showed Chinese growth stabilising. The official manufacturing purchasing managers’ index rose to expansionary territory in March for the first time in nine months. Improvements in economic indicators are particularly valuable to Beijing as it is tries to shore up confidence in the country’s growth prospects. In March alone, both Moody’s and Standard & Poor’s revised the outlook for China’s credit rating to negative from stable, triggering strong responses from Chinese government officials. “A Chinese economic recovery is very visible in March,” said Guo Lei, the chief macro-economic analyst with Founder Securities in Shanghai. “As a result, market expectations are changing, resulting in decelerated capital outflows.” China’s enhanced fiscal spending on infrastructure investment and a pickup in property sales showed the economy was emerging from the darkest days, he said. Guo added the Federal Reserve was widely expected to postpone interest rate increases, and this would help to relieve “outflow pressure for emerging markets”, including China. China’s consumer price inflation rises 2.3pc – more than expected – as food prices surge, but trend ‘not likely to go on’ China is to release the monthly production, consumption and investment data for March as well as first quarter GDP growth data in coming days. Yao Yudong, a researcher with the central bank, said the yuan might appreciate as demand for it grew following its inclusion in the SDR, Caixin reported.