China's Foreign Exchange Reserves Continue To Rise

China's Foreign Exchange Reserves Continue To Rise

Forex increased by $10 billion to $3.12 trillion in November.

It was the first time that China's reserves have climbed for 10 months in a row since June 2014, and brought its stockpile - the world's largest - to the highest since October a year ago.

The yuan has gained about 5 percent against the dollar this year, following a drop of 6.5 percent in 2016, its biggest annual drop since 1994.

Prior to market opening on Thursday, the People's Bank of China (PBOC) set the midpoint lower for the ninth straight trading day to 6.6195 per dollar, 32 pips or 0.05 per cent weaker than the previous fix of 6.6163 - the longest weakening streak since mid-November. But reserves have since climbed by $121 billion.

Foreign exchange reserves suggest that capital outflows continued to be a non-issue last month, Julian Evans-Pritchard, an economist at Capital Economics, said.

China's central bank and commercial lenders recorded net purchases of foreign exchange in September and October, reversing a trend of net sales stretching back almost two years.

On Monday, Chinese financial news outlet Yicai quoted Pan Gongsheng, head of the State Administration of Foreign Exchange, as saying that China has "basically exited" from curbs on firms' irrational outbound investment deals. Economists polled by The Wall Street Journal had expected a rise of $13 billion.