China’s foreign exchange reserves continue to rise in fresh boost for country’s economic prospects
Increase was smallest recorded this year, but analysts predict rosy outlook will allow central bank to ease capital controls
China’s foreign exchange reserves continued to pile up in October, rising for the ninth month in a row, although the increase of US$700 million recorded for the month was the smallest this year.
The People’s Bank of China (PBOC) said on Tuesday that its foreign exchange reserves reached US$3.11 trillion at the end of October, showing a picture of a balanced capital flow and offering fresh evidence of Beijing’s confidence in its economic prospects.
The central bank has “a stronger grip” on the yuan exchange rate now thanks to the adoption of a murky counter-cyclical factor in setting the daily price of the yuan, Larry Hu, the chief China economist for Macquarie Securities, wrote in a note.
“As capital outflows have disappeared from the headlines, we expect the PBOC to further ease capital controls,” he said.
The foreign exchange reserve data was released a day ahead of US President Donald Trump’s visit to China.
A stable reading for China’s foreign exchange stockpile could in theory offer Beijing a more comfortable position when talking with Washington as it is a sign of Chinese economic resilience and the government’s overseas spending power.