China’s Forex Reserves Increase for Second Straight Month in March

(Beijing) — China’s foreign exchange reserves, the world’s largest, increased for the second straight month in March, after unexpectedly bouncing back to above the $3 trillion psychological “comfort level” in February, official data showed Friday.

The country’s stockpile of foreign currency rose by $4 billion to $3.0091 trillion last month from $3.0051 in February, central bank data showed on Friday.

The rise in reserves in March shows that capital outflow pressure is continuing to ease on a better economic outlook, and changes to China’s foreign-currency stockpile are stabilizing, the State Administration of Foreign Exchange (SAFE) said in a statement on its website accompanying the data release.

SAFE also attributed the rise in part to favorable currency valuations, as other currencies such as the euro and Japanese yen strengthened against the dollar.

“Currently, Chinese economic fundamentals are sound, and the economy is continuing to maintain steady and rapid growth. Looking ahead, the current account will continue to run at an appropriate level, and cross-border capital flows will head toward to more balanced ground, thus foreign currency reserves might further stabilize,” SAFE added.

China’s economy has got off to a strong start this year with better-than-expected economic data. A research facility with the Bank of Communications Ltd. has projected 6.8% gross domestic product (GDP) growth for the first quarter, mainly due to rising investments in infrastructure projects, the manufacturing industry and real estate.

After peaking at $3.99 trillion in June 2014, China’s foreign-exchange reserves fell to $3.33 trillion at the end of 2015. As the reserves approached $3 trillion in the fourth quarter of 2016, authorities stepped in with a range of measures to stop the decline.

Contact reporter Pan Che (chepan@caixin.com)