Forex reserves stood above $3 trillion for the third consecutive month in April, thanks to stabilizing expectations for the yuan’s exchange rate, according to the nation’s top currency regulator.
Foreign exchange reserves stood near $3.03 trillion in March, up from about $3.01 trillion in the previous month, according to data on May 7 from the People’s Bank of China.
The data continued to increase for three straight months after it dropped below the $3 trillion benchmark in January, the first time since February 2011.
It comes after a string of data in the first quarter show that the economy has been on the track to stabilize, including improved year-on-year data of profits of major industrial companies and fixed asset investment.
More balanced and steady cross-border capital flows in China and appreciation of many other currencies pegged to dollars in the international market helped push up the forex reserves in April, an online statement from the State Administration of Foreign Exchange said on May 7.
Zhao Qingming, chief economist with the China Financial Futures Exchange, said eased capital flight pressure plays a key part in rising forex reserves.
“Appreciation of nondollar currencies means nondollar assets in the forex reserves increase when they convert into dollars,” he added.
The dollar index dipped by about 1.5 percent in April, declining for the second straight month.
Appreciation of major currencies in April helped add about $23.4 billion in dollar-denominated forex reserves, according to report by China International Capital Corp on May 7.
The yuan has become steadier against the dollar, after recent data showed that onshore yuan depreciated for the second month by around 0.08 percent, but the extent to depreciate has narrowed compared with the previous month.
Xie Yaxuan, chief economist with China Merchants Securities, said the market has more stable expectations for the yuan’s exchange rate, and he did not see much room for a continued rise of the dollar.
“The likelihood of the US Federal Reserve interest rate hike in June soared, but the dollar’s performance re-main-ed weak,” Xie said.
“The dollar will not have much upward momentum by the end of this year, considering a likely continued appreciation of the euro after the European economy ticked up in the first quarter, and President Donald Trump has said many times that he preferred a weaker dollar,” he added.
Pan Gongsheng, head of the foreign exchange administration, said in an article published in Modern Bankers magazine that China will improve management of foreign exchange reserves through prudent and professional investments.