Following their dip below the closely watched US$3 trillion mark in January, China’s foreign exchange reserves have risen for five straight months, easing capital outflow concerns.
China’s State Administration of Foreign Exchange attributed the increase to stable cross-border capital flow and appreciation of non-US dollar assets, reports Xinhua.
But uncertainties remain.
“Capital outflow pressure faced by China is mitigated but not gone,” Yao Wei, chief China economist at Societe Generale SA was quoted by Bloomberg as saying. “It seems that the PBOC still had to sell reserves to support the currency during a time of a weak dollar, estrictive capital controls and solid domestic growth.”
Analyst at the Bank of China’s Institute of International Finance in Beijing also noted continued uncertainty:
“Regulators haven’t eased their curbs […] There are more uncertainties, such as the Fed’s policies and the expected slowdown in China.”