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China's forex up again in March
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CHINA'S foreign exchange reserves rose in March for the second consecutive month on a more stable economic growth and easier capital outflow pressure.
The stockpile rose by US$3.96 billion in March to US$3.009 trillion, data by the People's Bank of China showed today.
It compared with US$6.92 billion yuan increase in February, which was the first increase in eight months.
The market had expected the reserves to rise to US$3.01 trillion in March according to a Reuters poll.
The State Administration of Foreign Exchange said in a statement that changes in China's foreign exchange reserves have stabilized in the first quarter on easing capital outflow pressure along with stabilizing domestic economy.
Looking ahead, the size of the reserve will be more stable on China's economic recovery, reasonable current account surplus, more balanced cross-border capital flow, and continued reforms on yuan's exchange rate mechanism.
Economists said the weaker dollar, improved trade balance, and slower capital outflow had positive effects on the foreign exchange reserves.
“We expect a positive valuation effect this month due to weaker US dollar, and improved trade balance as distortion from Lunar New Year faded,” Morgan Stanley said in a report before the data were released. “On the other hand, we expect capital outflows in March to remain largely stable at Jan-Feb level, which is much slower than in the fourth quarter last year amid better external demand, continued PBOC monetary tightening and stricter capital controls.”
Zhu Haibin, chief economist of J.P. Morgan, said pressure on the foreign exchange reserves remain this year though the toughest time had passed due to the outlook for slower capital outflow.
He said the stockpile may still fall below the US$3 trillion mark this year but the reserves remain sufficient as J.P. Morgan considered the alarming level at US$2.2 trillion yuan.
China is due to release its first quarter GDP growth on April 17, and the market has expected the growth to reach 6.8 percent year-on-year, 0.1 percentage points faster the annual growth for 2016.
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