"It means a further tightening of monetary policy when the US interest rate up-cycle overlaps China's super financial down-cycle," Guotai Junan Securities analyst Wei Feng said. "Capital outflows will become more challenging in the second half when the uncertainties of China's economic growth increase and the US Federal Reserve continues to raise interest rates." Liu said. Meanwhile, the policy uncertainties of the Trump administration and a recovery in the euro zone sent the US dollar index to a six-month low of 98.5 to the euro. As the yuan rapidly approached 7:1 against the greenback and its forex reserves dropped below US$3 trillion in January, the central government stepped up reviews of "irrational" outbound investments and tightened forex purchases by individuals. China's forex reserves up surprisingly to US$3 trillion as curbs on capital outflows bite"The US dollar index is likely to remain weak and this will be good for expectations for the yuan exchange rate," Yan said.
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China's forex reserves rise for 3rd consecutive month
Forex reserves climbed to US$3.0295 trillion at the end of April from US$3.0091 trillion a month earlier, up 0.7 percent month on month, according People's Bank of China statistics. China's forex reserves rose for the third month in a row in April, bank data showed yesterday. In January, China's forex reserves declined below the closely watched US$3 trillion mark for the first time since February 2011. The State Administration of Foreign Exchange attributed the continuous rise of forex reserves to stable cross-border capital flow and yuan appreciation. The Chinese economy expanded 6.9 percent in the first quarter this year, up 0.1 percent compared with the last quarter of 2016.
China's April forex reserves rise, beating market expectations
REUTERS/Tyrone Siu/File PhotoBEIJING China's foreign exchange reserves rose in April for a third straight month, beating market expectations, as capital controls and a pause in the dollar's rally helped staunch capital outflows. Economists polled by Reuters had expected foreign exchange reserves to rise by $11.0 billion to $3.02 trillion in April. Reserves rose $21 billion (£16.17 billion) in April to $3.03 trillion, compared with an increase of $3.96 billion in March to $3.009 trillion. The forex regulator said on Wednesday that China would improve macro-prudential management on cross-border flows to ward off potential risks and "optimise" diversification of foreign exchange reserves. Premier Li Keqiang said last month that market confidence in the yuan had significantly improved and the outside world had stable expectations for the yuan exchange rate.
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