China's foreign exchange reserves increased for a second month in row in March, rising by $3.9 billion, officials said Friday, as the yuan currency shows signs of stabilisation. The world's largest currency hoard rose to $3.01 trillion, data from the People's Bank of China (PBoC) showed, missing a forecast by Bloomberg News that reserves would rise to $3.011 trillion.
The figure was released as Chinese President Xi Jinping was in Florida for a first face-to-face meeting with his American counterpart Donald Trump, who has accused Beijing of deliberately weakening the yuan to boost exports and has threatened to officially declare it a currency manipulator. The rise marks the second-straight monthly increase following months of decline in forex reserves as China sold dollars to defend the yuan against depreciation caused by capital outflows as its economy slows.
Authorities' efforts to put the brakes on money leaving the country by propping up the value of the yuan have rapidly drained reserves. In recent months Beijing has rolled out a series of stringent new measures to curb overseas transfers, heightening already strict requirements. These include cracking down on underground banking operations used to spirit money abroad and curbing "irrational" spending by companies that have been snapping up foreign assets such as football teams, luxury properties and Hollywood studios.
"The PBoC largely halted its intervention in March," Julian Evans-Pritchard of China Economist said in a note, adding that "the catalyst for this shift has been an easing of capital outflows". "Although tighter capital controls have played a role in curtailing outflows, the key factor appears to have been the recent stability of the renminbi against the US dollar which has tempered depreciation expectations," he said.
Comments
Comments are closed.