Beijing: China's foreign exchange reserves stayed above $3trillion in March, during which a pause in the dollar's rally aided Beijing's efforts to contain capital outflows.
Reserves rose $3.96bn during March - less than the $5bn predicted in a Reuters poll - to total $3.009 trillion, compared with $3.005 trillion at the end of February.
In January, reserves slipped below $3 trillion for the first time in nearly six years, but in February they moved back above that line with their first rise in eight months. The March increase marks the first time reserves had increased two consecutive months since April 2016. Julian Evans-Pritchard (pictured) of Capital Economics said the way reserves were broadly stable in March "suggests that the recent easing of capital outflows has allowed the People's Bank of China to step back from FX intervention".
"The obvious follow-up question is whether this halt to official intervention is a temporary phenomenon or a more permanent shift," he wrote in a note. "Our hunch is that it will be temporary," asserting that the key factor in curtailing outflows was the pause in dollar appreciation rather than tighter capital controls."
China's foreign-exchange regulator, in a statement on its website yesterday, said pressure on capital outflows eased somewhat in the first quarter.
Forex reserves are expected to further stabilise, the regulator said, adding that the monthly change in reserves' total is also stabilising. The March reserves data came out as Chinese President Xi Jinping is meeting with US President Donald Trump in Florida, and one week before a US Treasury's currency report - which could label trading partners as currency manipulators - is due. Xi urged cooperation with the United States on trade and investment.
China's State Administration of Foreign Exchange (SAFE), the regulator, said last week that pressure from capital outflows eased somewhat in 2016 and there will be greater flexibility in the yuan's exchange rate in 2017.
