China’s foreign exchange reserves fell by $26 billion to $3.4163 trillion at the end of June, mainly due to a stronger US dollar and valuation effects on reserve assets, which outweighed gains from global financial asset prices. Meanwhile, China’s official gold reserves rose by 480,000 ounces to 75.44 million ounces, marking the 20th consecutive month of increases. Analysts attributed the continued gold accumulation to efforts to diversify reserve assets, reduce reliance on foreign currency holdings, and hedge against rising global geopolitical and economic uncertainty. Despite gold price volatility, central banks worldwide continue to show strong demand for gold, and China’s relatively low gold share in its reserve portfolio suggests further room for additional purchases.
According to the latest data released by the State Administration of Foreign Exchange (SAFE), as of the end of June 2026, China’s foreign exchange reserves stood at $3.4163 trillion, down $26 billion from the end of May, a decline of 0.75%.
In June 2026, China’s foreign exchange reserves were influenced by shifts in the global macroeconomic environment, changes in major central banks’ monetary policy expectations, and evolving market sentiment. The U.S. Dollar Index strengthened during the month, while global financial asset prices showed mixed performance. The combined effects of exchange-rate movements and fluctuations in asset valuations resulted in a decline in the measured value of China’s foreign exchange reserves.
A SAFE official noted that China’s economy remains broadly stable and continues to advance toward higher-quality and more efficient growth, providing a solid foundation for maintaining the overall stability of foreign exchange reserves.
Specifically, in terms of currencies, the U.S. Dollar Index (DXY) rose 2.3% to 101.2, while non-U.S. currencies generally weakened. In terms of assets, the USD-hedged Bloomberg Global Aggregate Total Return Index rose 0.4%, while the S&P 500 Index declined 1.1%.
Wen Bin, chief economist at China Minsheng Bank, said that the decline of China’s foreign exchange reserves to $3.4163 trillion at the end of June was caused by the combined effects of exchange-rate conversion and changes in asset prices.
Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said that foreign exchange reserves at the end of June had increased by $58.4 billion compared with the end of last year, representing growth of 1.7%, mainly driven by rising prices of major global financial assets held as part of foreign exchange reserve investments. Since the beginning of the year, the U.S. Dollar Index has risen 3.0%, which has exerted some downward pressure on the valuation of China’s foreign exchange reserves.
“In addition, the RMB’s appreciation since the beginning of the year may have prompted the central bank to take measures to curb excessive currency strengthening. It cannot be ruled out that the central bank conducted some market operations involving the purchase of U.S. dollars and the sale of RMB, which could have provided modest support to foreign exchange reserves. Data showed that central bank foreign exchange-related operations remained broadly stable and increased moderately from January to May, with transaction factors contributing $47.94 billion to foreign exchange reserve assets in Q1,” Wang said.
“Looking ahead, foreign exchange reserves are expected to remain broadly stable around $3 trillion, supported by a range of fundamental factors. Amid heightened volatility in the global political and economic landscape, a sufficient level of foreign exchange reserves will continue to provide important support for maintaining the renminbi exchange rate at a reasonable and balanced level, while serving as a key buffer against potential external shocks,” Wang added.
Wen believes that exports will continue to serve as a fundamental pillar supporting China’s international balance of payments. The growth momentum comes from three major factors:
First, the global artificial intelligence investment cycle remains intact, with strong overseas demand for chips, servers, and related infrastructure continuing to drive external demand growth. Second, China’s ongoing diversification of export markets is helping mitigate the impact of disruptions from any single economy. Third, long-term global demand for energy transition remains robust, and supported by its comprehensive industrial supply chain, China’s new energy products continue to maintain strong international competitiveness.
Regarding gold reserves, the People’s Bank of China (PBOC) increased its official gold holdings for the 20th consecutive month as of the end of June 2026. The increase amounted to 480,000 ounces, marking the fourth consecutive month of accelerating purchases and remaining in line with market expectations.
At the June monetary policy meeting, the U.S. Federal Reserve delivered a more hawkish-than-expected signal, prompting a decline in international gold prices for the fourth consecutive month. Gold prices fell 12.44% in June, significantly exceeding the 2.03% decline in May. Wang said that the sharp correction in gold prices may have been a key factor prompting the central bank to accelerate its gold purchases during the month.
A previous survey by the World Gold Council (WGC) found that 89% of central banks expect global gold reserves to increase over the next 12 months, while a record 45% expect their own institutions’ gold holdings to rise during the same period. The findings suggest that short-term volatility in gold prices has not materially weakened central banks’ long-term commitment to gold accumulation and reserve diversification.