China's July forex reserves fall to $3.20 trillion

Sat Aug 6, 2016 11:00pm EDT
 
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BEIJING (Reuters) - China's foreign exchange reserves fell to $3.20 trillion in July, central bank data showed on Sunday, in line with analyst expectations.

Economists polled by Reuters had predicted reserves would fall to $3.20 trillion from $3.21 trillion at the end of June.

China's reserves, the largest in the world, fell by $4.10 billion in July. The reserves rose $13.4 billion in June, rebounding from a 5-year low in May.

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.

However, economists are divided over how much money is still flowing out of the country via other channels, with opaque policymaking and some inconsistency in the data raising suspicions that the fall in the yuan may be masking capital outflow pressure.   Continued...

 
A Chinese national flag flutters outside the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, April 3, 2014.   REUTERS/Petar Kujundzic/File Photo