China’s forex reserves rise by $10 billion in March, first monthly increase since October
China has stopped bleeding cash — at least, for now.
The country’s foreign exchange reserves rose by roughly $10 billion in March to $3.21 trillion, the first monthly increase since October, according to central bank data.
The modest upward tick indicates that money is no longer flooding out of China at the torrid pace seen in late 2015 and early 2016.
Investors had been sending huge sums out of China amid worries over a slowing economy, stock market turmoil and a weakening yuan. The capital outflows increased downward pressure on the yuan, a trend Beijing appeared to counter by using its reserves of foreign currencies to buy yuan.
It’s a strategy many countries use, but it can deplete a central bank’s “rainy day” reserve fund. Analysts had been warning that Beijing couldn’t keep using this approach indefinitely.
Now, it appears that investor concerns have eased.
“Receding fears over a sharp [yuan] devaluation, along with favorable exchange rate movements, has helped end the recent string of declines in the value of China’s foreign exchange reserves,” said Julian Evans-Pritchard of Capital Economics.
