China Feb FX reserves rebound above $ 3 t, first rise in eight months

Thursday, 9 March 2017 00:00 - - {{hitsCtrl.values.hits}}

Reuters: China’s foreign exchange reserves unexpectedly rose for the first time in eight months in February, rebounding above $ 3 trillion as a regulatory crackdown and weakness in the dollar helped staunch capital outflows.

Reserves rose $ 6.92 billion during February to total $ 3.005 trillion, their first increase since June 2016, compared with a drop of $ 12.3 billion in January, when reserves fell to $ 2.998 trillion.

Economists polled by Reuters had expected forex reserves to drop by $ 25 billion to $ 2.973 trillion in February.

China has tightened rules on moving capital outside the country in recent months as it seeks to support the yuan currency and stem a slide in its foreign exchange reserves.

It burned through nearly $ 320 billion of reserves last year but the yuan still fell 6.6% against the dollar, its biggest annual drop since 1994.

The yuan has steadied in recent weeks as the dollar’s rally lost steam. The Chinese currency gained 0.2% in February, and is up 0.8% so far in 2017.

However, expectations of US interest rate hikes beginning as early as next week have rekindled fears that the yuan could come under renewed pressure. The prospect of the yuan depreciating could inflame trade tensions with the US President Donald Trump’s administration.

China’s gold reserves rose to $ 74.376 billion at the end of February, from $ 71.292 billion at end-January, data published on the People’s Bank of China website showed.