Forex reserves met the first time decline since 2003
A State Administration of Foreign Exchange official has said that China’s foreign exchange reserves have decrease for the first time in five years after peaking at $1.9 trillion at the end of September.
Based on the remarks of Cai Qiusheng, head of the foreign debts section under the capital-account management department at an annual meeting of China’s import and export enterprises, China’s forex reserves declined indeed, but Cai disclosed neither in which month the forex reserves fell below the $1.9 trillion level nor the current size of the forex reserves.
According to the central bank data, at the end of September, China’s forex reserves stood at $1.9056 trillion, which is a growth of 32.92% year-on-year. The reserves increased $377.3 billion in the first nine months of this year, $10 billion more than the year-earlier increment.
Yuan Yuedong, a senior researcher with the global financial market department of Bank of China holds the opinion that the latest reduction would not influence the Chinese economy severely.
Yuan thought the down trend in forex reserves was bought about by the recent slower appreciation of the yuan and short-term depreciation against the US dollar as well as possible increased offshore investment by Chinese companies.
An anonymous investment-bank analyst said the decline of forex reserve might be related to capital withdrawal from China by some foreign institutions which don’t have enough liquidity ability.
But remarks from Commerce Minister Chen Deming earlier was that large amounts of capital do not seem to flow out of China and China was still an attractive destination for FDI.
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