China Forex Reserves Fall for Fifth Straight Month
In November, Beijing depleted its foreign exchange reserves more than expected, as authorities struggled to stem massive outflows of capital in view of a depreciating yuan against a strongly rising US dollar.
According to data released by the People’s Bank of China on Wednesday, the central bank’s forex reserves fell by $69.06 billion last month, to $3.052 trillion—the fifth straight month of decline and a level not seen since March 2011. China’s gold reserves also fell to $69.7 billion at end-November from $75.348 billion at end-October, DW reported.
November’s drop was the largest since January, when a sharp fall in the yuan and worries about China’s slowing economy raised fears that Beijing would devalue its currency, shocking global financial markets.
The central bank is widely believed to have sold US dollars to support the yuan currency as it sunk to more than 8-1/2 year lows. China’s foreign exchange regulator said the decline in reserves was partly due to the dollar’s 3% rally versus major currencies in November.
The yuan fell 1.6% in November alone, its worst month since August 2015, and adding to a more than 5% slide so far this year. China’s currency has been falling alongside other emerging market currencies in the face of the rising dollar. The US currency is riding high on hopes that president-elect Donald Trump’s economic policy will boost growth in the world’s biggest economy.
In addition, the yuan is under pressure following Trump’s remarks to label China a currency manipulator on his first day in office on Jan. 20. Moreover, he vowed to impose huge tariffs on imports of Chinese goods to reduce the countries massive trade surplus with the US.