China’s forex reserves rise for fifth straight month

2017-07-07
Xinhua

BEIJING — China’s foreign exchange reserves rose for the fifth month in a row in June, indicating easing capital flight pressure, central bank data showed on July 7.

The reserves stood at $3.057 trillion at the end of June, up $3.2 billion from the end of May.

This was the fifth month of increases since reserves declined below the closely watched 3-trillion-dollar mark in January, easing concerns over capital outflows.

In the first half of 2017, the foreign exchange stockpile increased $46.3 billion, or a rise of 1.5 percent, according to the State Administration of Foreign Exchange (SAFE).

SAFE attributed the rise of forex reserves in June to stable cross-border capital flow and the relative appreciation of non-US dollar assets.

There had been concerns over capital flowing out of the Chinese market in the second half of 2016, when the economy was facing looming downward pressures and the Chinese yuan was in the middle of a losing streak against the US dollar.

As China’s economy stands on a firmer footing and the yuan continues to stabilize, the stockpile began to increase steadily from February.

Recent economic data has pointed to strength in the Chinese economy, which grew 6.9 percent in the first quarter of the year, well above the annual growth target of around 6.5 percent.

The official manufacturing purchasing managers’ index (PMI) beat market forecasts and rose from 51.2 in May to 51.7 in June, the second highest reading of the year. The official non-manufacturing PMI also expanded at a faster pace in June, adding to signs of a stabilizing economy.

Looking forward, as the country continues to open up the financial market, cross-border capital flow will continue to stabilize while supply and demand in the foreign exchange market will stay balanced, according to SAFE.

The data on July 7 also showed that the country’s gold reserves dropped to $73.59 billion by the end of June from $75 billion at the end of May.