The volume of China’s foreign exchange reserves for the first time since 2011, fell below $3 trillion

The people’s Bank of China

Photo: Jason Lee / Reuters

The volume of China’s foreign exchange reserves for the first time since 2011 is less than $3 trillion. The reduction of the world’s largest foreign exchange reserves continues from mid-2016, a few months, they fell by more than $200 billion

The volume of China’s foreign exchange reserves (excluding gold) at the end of January 2017 dropped to $2,9982 trillion, from the data of the state Agency, the asset Manager of the people’s Bank of China (SAFE). Below $3 trillion total assets fell for the first time since the February 2011 high of $3,993 trillion it reached in June 2014.

China has the world’s largest currency reserves, which exceed the reserves of Japan, Switzerland, Saudi Arabia and Russia combined. However, in June of 2016, China is continuously reducing its reserves, resulting in seven months, they decreased by about $207 billion, or 6,45%, from $3.2 trillion to $2,998 trillion.

In January 2017 the volume of China’s reserves fell by $12.3 billion. the Decline exceeded the forecast of analysts by Reuters, but was the lowest in the last seven months.

The experts of the Agency noted that the reduction in reserves in January would be great, if not for the sudden reversal of the dollar and its decline has increased the value of non-dollar assets in the reserves of the PRC.

In November 2016, analysts attributed the decline in foreign exchange reserves of China sales of US Treasury bonds. Chief economist at Eurasian development Bank Yaroslav Lisovolik has explained then the RBC that China takes money from US Treasuries to carry out “anti-crisis measures” in support of the Renminbi. According to Reuters, the January decline in China’s reserves is also associated with the actions of the people’s Bank of China actively sold foreign currency on the domestic market.

Commenting on the results Jan, SAFE urged “not to pay too much attention to” the decline in reserves below $3 trillion, calling the changes “normal”. However, the experts Reuters believe that as a result of the fall in reserves below the psychologically important level could be the tightening of control over capital outflows.

Leave a Reply

Your email address will not be published. Required fields are marked *