China foreign reserves rise a 7th month amid yuan strength

Pic By BLOMMBERG

BEIJING • China’s foreign-exchange (forex) reserves posted a seventh straight gain in August as the yuan rose in its best monthly performance in at least a decade.

The stockpile climbed US$11 billion to US$3.09 trillion (RM13.01 trillion), the People’s Bank of China said yesterday, versus a US$3.1 trillion estimate in a Bloomberg survey.

Steady economic fundamentals have helped restore confidence in the yuan, and capital controls remain tight as new rules on overseas investments were introduced last month to categorise the nation’s plan to crack down on “irrational” outbound acquisitions.

The yuan has surprised analysts with faster than expected appreciation. The onshore currency gained 2.13% to 6.5889 per dollar last month. A weaker dollar has lifted the value of assets in yen and euros.

“The likelihood is high that China may see a reversal of forex outflows in the next few months,” Eva Yi, an analyst at China International Capital Corp in Beijing, wrote in a note yesterday. The potential shift in capital flows and exchange-rate expectations may prompt China to consider relaxing some curbs on individuals buying foreign currencies, she wrote. — Bloomberg