China’s forex reserves fall to $3.20 trillion in July
Economists polled by Reuters had predicted reserves would fall to $3.20 trillion from $3.21 trillion at the end of June.
China’s gold reserves rose to $78.89 billion at the end of July, up from $77.43 billion at end-June, data published on the People’s Bank of China website showed.
Net foreign exchange sales by the People’s Bank of China in June jumped to their highest in three months, as the central bank sought to shield the yuan from market volatility caused by Britain’s decision to leave the European Union.
China’s foreign exchange regulator recently said China would be able to keep cross-border capital flows steady given its relatively sound economic fundamentals, solid current account surplus and ample foreign exchange reserves. China’s foreign reserves fell by a record $513 billion last year after it devalued the yuan currency in August, sparking a flood of capital outflows that alarmed global markets.
The yuan has eased another 2 percent this year and is hovering near six-year lows, but official data suggests speculative capital flight is under control for now, thanks to tighter capital controls and currency trading regulations.
After the yuan slipped to below the psychologically important 6.7/dollar level on July 18, it has seen a mild rebound as the central bank stepped in to control the pace of its depreciation.
Still, most China watchers expect it will resume its descent soon, risking a renewed surge in outflows.
China will keep the yuan basically stable and continue with market-based interest rate reform, the central bank said on Wednesday.
The country’s economy expanded slightly faster than expected in the second quarter but private investment growth shrank to a record low, suggesting future weakness that could pressure the government to roll out more support measures.
Source : Reuters