China’s foreign exchange reserves unexpectedly peeked back above the closely watched US$3 trillion level in February, giving the yuan a short-lived boost to 6.8890 yuan against the greenback from 6.8940 in offshore trading just moments after the numbers were announced.
Indeed, in a move that appeared to uncannily presage the better-than-expected reserves data, a late rally on the Shanghai stock market saw the main composite index end the day at 3,242.41, a gain of 0.26%.
China’s stockpile of international currency rose US$6.92 billion in February to US$3.005 trillion, according to data from the People’s Bank of China, the central bank. January’s US$2.998 trillion had been the first time in almost six years that reserves fell through the US$3 trillion level — a marker of little practical significance but which has nonetheless proved a source of market concern.
The market had been looking for a drop of roughly US$30 billion for February.
The rebound in reserves adds weight to the efforts of Chinese authorities to curb outflows through tighter surveillance of capital flows in the banking system. That follows seven straight months of declines in the forex treasure chest with a drop of US$41 billion in December and US$12 billion in January.
Meanwhile, gold reserves held by China rose again to US$74.376 billion at the end of February, from US$71.292 billion in January. The gain came from bullion prices edging higher, with the volume of official gold holdings remaining steady at 59.24 million ounces.