China FX Reserves Fall Almost $100 Bln to Lowest Since May 2012

China’s foreign reserves fell for a third straight month in January, as the central bank dumped dollars to defend the yuan and prevent an increase in capital outflows.

China’s foreign reserves fell $99.5 billion to $3.23 trillion in January, the lowest level since May 2012, central bank data showed, but higher than the median forecast of $3.20 trillion from economists surveyed in a Reuters poll.

The size of the drop was second only to the $107.9 billion fall in December, the largest monthly decline on record. The central bank has intensified efforts to prop up the yuan after it staged a surprise devaluation in early August.

China’s reserves remain the world’s largest despite losing around $420 billion in the last six months. In 2015, they fell by $513 billion, the largest annual drop in history.

The country’s foreign exchange regulators said on February 4 that trade and investment had caused $342.3 billion of the drop in reserves in 2015, while currency and asset price changes caused another $170.3 billion fall.

Reuters

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