China’s Foreign Exchange Reserves Inch Up After July Dip

(Bloomberg) — China’s foreign currency holdings rose in August, signaling the pressures from capital outflow remain muted despite the yuan’s rapid depreciation.

Reserves climbed to $3.107 trillion from $3.104 trillion in July, the People’s Bank of China said Saturday.

Key insights

* The reading is higher than the median estimate of $3.1 trillion in a Bloomberg survey of economists.

* China’s reserves stockpile has stayed largely steady since 2017 as the authorities refrain from direct intervention in the market while keeping a tight rein on capital controls. The yuan weakened more than 3.8% in August, the biggest single-month decline since data started in 1994.

* “Capital outflow pressures may have increased in August, as the yuan weakened,” while trade and foreign investment remain in surplus, keeping the reserves holdings largely stable, said Wang Tao, chief China economist at UBS Group AG.

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* Gold reserves rose for a ninth month.

* China’s foreign exchange supply and demand was basically balanced in August, and foreign exchange reserves rose on changes in asset prices and exchange rates, the State Administration of Foreign Exchange said in a statement.

Contact editor Yang Ge (geyang@caixin.com)