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China forex reserves fall by record amount

  • Author:naky
  • Source:www.diecastingpartsupplier.com
  • Release on :2015-09-10
China's foreign exchange reserves fell by $94bn last month as Beijing implemented a new currency regime that ostensibly gives more say to market voices.

The figure suggests Beijing stepped up its efforts to intervene in the currency market to create stability in the wake of its new regime.

The $94bn cutback is the sharpest monthly fall in reserves on record, while in percentage terms it's the biggest fall since May 2012. In July China's reserves had only been depleted by $42bn.

Says Hao Zhou, an analyst at Commerzbank:

Further intervention can be expected as China reiterates to maintain a "stable currency". However, it is not costless.

At the end of August China's reserves fell 2.6 per cent from July to $3.557bn — a sizeable amount but the least since August 2013.

Julian Evans-Pritchard at Capital Economics said some analysts had suggested the PBoC has burned through as much as $200bn to shore up the renminbi. Mr Evans-Pritchard added:

Actual foreign exchange sales are likely to have been slightly larger than the headline fall in the value of reserves. A strengthening of the yen and euro last month will have boosted the dollar value of the reserves by around $20bn. This implies that the People's Bank sold about $110bn last month.

Below are the official numbers, followed by Barclays' estimates for FX intervention - from Sept 3