China’s forex reserves drop to 5-month low
CHINA’S foreign exchange reserves in April fell more than expected, to a five-month low, as the US dollar rebounded and on growing signs that Chinese regulators are less worried about capital flight.
Reserves fell US$17.97 billion in April to US$3.125 trillion — the lowest since November 2017, compared with a rise of US$8.34 billion in March, central bank data showed yesterday.
Economists polled by Reuters had forecast reserves would drop around US$10 billion in April to US$3.133 trillion, with a stronger US dollar versus other currencies expected to depress the value of China’s dollar-denominated reserves.
The fall in non-dollar currencies against the US dollar and correction in asset prices led to the small reserves drop in April, the State Administration of Foreign Exchange, China’s foreign exchange regulator, said.
“The drop reflected almost exclusively the valuation effect of a firmer USD in April,” said Andy Ji, currency strategist at Commonwealth Bank of Australia in Singapore.
“In other words, there are no signs of capital outflows at the current juncture.”
But Julian Evans-Pritchard at Capital Economics said he believed China’s current account returned to a healthy surplus in April from a seasonal deficit in March, implying a sharp reversal in capital flows from net inflows to net outflows.
“This is nothing to worry about, however. Such volatility in net cross-border flows is not uncommon at this time of year and net outflows look to have remained well within regulators’ comfort zone,” he said in a note.
The dollar index, measuring it against other major currencies, rose 2 percent last month.
Capital flight was seen as a major risk for China at the start of 2017, but a combination of tighter capital controls and a faltering dollar helped the yuan stage a strong turnaround, bolstering confidence in the Chinese economy.
Last year, China’s reserves rose for the first time since 2014 and its cross-border capital flows went from net outflows to basically stable.
Trade disputes between China and the United States could hurt exporters on both sides and weigh on their economic growth, while adding to volatility in global financial markets.
But SAFE said in April that any potential impact on its cross-border capital flows stemming from Sino-US trade frictions can be controlled.
The yuan lost around 1 percent against the resurgent greenback in April, but it is still up about 2.5 percent so far this year.
Indeed, in recent weeks, Chinese authorities have announced moves which suggest they are less worried about capital outflows, including allowing domestic investors to put more money into global financial markets.
At the same time, China has moved to give foreign investors more access to its equity, bond and commodity futures markets, which will help support the yuan and offer greater balance to cross-border flows.
The value of China’s gold reserves fell to US$77.788 billion at the end of April, from US$78.419 billion at the end of March.
- About Us
- |
- Terms of Use
- |
- RSS
- |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证:沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证:31120180004
- |
- 网络视听许可证:0909346
- |
- 广播电视节目制作许可证:沪字第354号
- |
- 增值电信业务经营许可证:沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.