China’s foreign exchange reserves dip on US dollar rebound
But Beijing seems less concerned about capital flight – in sharp contrast to a year ago
China’s foreign exchange reserves in April fell more than expected, to a five-month low, as the US dollar rebounded and on growing signs that Chinese regulators are less worried about capital flight.
Reserves fell US$17.97 billion in April to US$3.125 trillion – the lowest since November, compared with a rise of US$8.34 billion in March, central bank data showed on Monday.
Economists polled by Reuters had forecast reserves would drop around US$10 billion in April to US$3.133 trillion, with a stronger US dollar versus other currencies expected to depress the value of China’s dollar-denominated reserves.
The dollar index against other major currencies rose 2 per cent last month.
Capital flight was seen as a major risk for China at the start of last year, but a combination of tighter capital controls and a faltering dollar helped the yuan stage a strong turnaround, bolstering confidence in the economy.
Last year, China’s reserves rose for the first time since 2014 and its cross-border capital flows went from net outflows to basically stable.