By BLOOMBERG

BEIJING • China’s foreign currency holdings decreased for the first time in more than a year, as rising US Treasury yields weighed on valuations.

Reserves declined US$27 billion to US$3.13 trillion (RM12.21 trillion) in February, the People’s Bank of China (PBoC) said yesterday.

That missed the US$3.16 trillion median estimate in Bloomberg’s survey.

China’s stockpile, the world’s largest, increased last year for the first time since 2014 as robust economic growth boosted confidence in the yuan and trade remained upbeat. Still, US trade tensions and tax cuts may renew capital outflow pressure in China and other emerging-market economies.

“Negative foreign-exchange (forex) valuation effects accounted for most of the drop,” said Khoon Goh, head of research at Australia and New Zealand Banking Group Ltd in Singapore.

“Perhaps some negative impact also from rising US yields on their Treasury holdings as well contributed to the drop. There was no reason for the PBoC to be intervening in the forex market in February since there was no large depreciation pressure on the yuan.”

Falling asset prices and weak non-dollar currencies led to the decline in reserves, which are expected to remain stable overall, the State Administration of Foreign Exchange said in a statement with the data. The yuan weakened against the dollar by 0.6% in February, the first monthly drop since September.