China’s forex reserves growth in November exceeds expectations as US dollar weakens
- Analysts are awaiting data to confirm whether there was currency intervention by the central bank that contributed to its foreign reserves
- China has kept its reserves largely stable in recent years, between US$3 trillion and US$3.2 trillion, signalling it is letting market demand and supply forces determine yuan’s value
China’s foreign exchange reserves, the world’s largest war chest, rose more than expected in November, likely boosted by a weaker US dollar and gains from investments in global equities.
The reserves value increased by about US$50 billion last month, to US$3.1785 trillion, reaching the highest level since August 2016, official data showed on Monday. The figure exceeded the US$3.150 trillion forecast by a Reuters poll of analysts. Meanwhile, the value of gold assets declined to US$110.4 billion, falling for a fourth straight month.
Analysts said they needed to wait for the release of China’s third-quarter balance of payments data in the coming weeks, to confirm whether there was any currency intervention by the central bank that also contributed to its foreign reserves.
The monthly change in China’s forex reserves is disclosed on the seventh day of every month and is read as a measure of the People’s Bank of China’s (PBOC) purchases or sales of reserve assets held in foreign currencies – an indicator of market intervention to manage the yuan’s exchange rate.
