China’s foreign exchange reserves fell for 2nd straight month in Aug to hit lowest since Oct 2018 amid US dollar strengthening
China’s foreign exchange reserves fell for 2nd straight month in Aug to hit lowest since Oct 2018 amid US dollar strengthening

China’s foreign exchange reserves fell for 2nd straight month in Aug to hit lowest since Oct 2018 amid US dollar strengthening

 

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China’s foreign exchange reserves declined for a second straight month to the lowest since October 2018 as global financial asset prices dropped, according to the official data.

Foreign exchange reserves fell to $3.0549 trillion at the end of August, falling by $49.2 billion or 1.58% from $3.1 trillion in the previous month, according to data released by the State Administration of Foreign Exchanges (SAFE) on Wednesday. That was slightly below the median estimate of $3.065 trillion in a Bloomberg survey of economists. 

Cross-border capita flows were rational and orderly and foreign exchanges supply and demand were largely balanced in August, however, due to tightening expectation of major economies’ monetary policy and macro economic data, the US Dollar Index rose, leading to prices of non-dollar financial assets, said Wang Chun Ying, spokesperson and deputy head of the SAFE.

The US dollar index surged 2.69% in August, while the yuan depreciated sharply against the greenback. The onshore yuan weakened by 1,515 pips or more than 2.2% against the dollar last month and the yuan’s fixing weakened by 1,469 pips or 2.17%, both hit the weakest level in two years.

Looking ahead, the external environment is becoming more complex and severe, the downward pressure on the global economy is rising and the volatility in the global financial market is increasing, said Wang.

However, China will maintain the economic operation within a reasonable range with a series of pro-growth policies which will help keep the country’s foreign exchanges largely stable, Wang added.

China’s official gold reserves stood at 62.64 million ounces or $107.49 billion at the end of August, showed the data.