China’s foreign exchange reserves declined for a second straight month to the lowest since October 2018 as global financial asset prices dropped, according to the government.
(Bloomberg) — China’s foreign exchange reserves declined for a second straight month to the lowest since October 2018 as global financial asset prices dropped, according to the government.
Reserves decreased to $3.0549 trillion as of the end of August, down $49.2 billion from a month ago, data released by the People’s Bank of China showed. That was slightly below the median estimate of $3.065 trillion in a Bloomberg survey of economists.
The fall was due to drops in asset prices as the dollar strengthened, Wang Chunying, spokeswoman at the State Administration of Foreign Exchange, said in a statement. Measures that China has recently unveiled to bolster economic growth will help maintain reserves at a stable level, she said.
China’s trade surplus, a key source of foreign exchange, fell to $79.4 billion last month, $21.9 billion less than July. The drop was mainly led by weaker export growth, which rose at the slowest pace since April as consumers around the world cut back on spending amid soaring inflation and a shift away from pandemic-related goods toward services.
A smaller trade surplus going forward will weigh on the currency, which has slumped this year and is close to breaching 7 to the dollar as capital has left the country to chase a strengthening greenback. The PBOC has taken several steps recently to slow the yuan’s depreciation, and on Wednesday the bank set its reference rate for the currency with the strongest bias on record, marking the 11th straight day of stronger-than-expected fixings.
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