China’s foreign-exchange reserves increased for the second month in a row as market sentiment toward the yuan improved and a stronger yen and euro boosted the headline number.
The world’s largest currency hoard rose by US$7.089 billion to US$3.22 trillion last month, the People’s Bank of China said in a statement yesterday.
That compares with the US$3.20 trillion expected by economists surveyed by Bloomberg.
REBOUND
The market’s confidence in the yuan has strengthened as data released last month showed a rebound across several indicators and the US Federal Reserve signaled they would hold off on interest-rate increases. Whether China’s momentum can be sustained remains to be seen, as some suggestions of a US rate hike next month could revive capital outflow pressures.
“Less demand for [US] dollars with more confidence in the yuan eased capital outflows,” OCBC Bank (華僑銀行) economist Tommy Xie (謝東明) said in an interview ahead of the release.
Even so, the headline reserves number might be stronger than it looks, as the yen and euro rose against the US dollar last month, boosting China’s US dollar-denominated multi-currency stockpile.
The hoard is also denominated in IMF Special Drawing Rights, which stood at 2.27 trillion units last month compared with 2.28 trillion units a month earlier.
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