July 25, 2021

Chinese foreign exchange reserves down 0.7% in September

Chinese foreign exchange reserves down 0.7% in September



Chinese foreign exchange reserves fell by 0.7% in September (22,700 million dollars) compared to the previous month, to stand at 3,087 billion dollars, reported the State Administration of Foreign Currency of the country (SAFE, in English).

The spokesman of the agency, Wang Chunying, quoted by the state agency Xinhua, attributed this contraction to a number of factors that include the conversion of the exchange rate and fluctuations in the prices of assets.

He stressed that, although the external environment still shows many uncertainties, the fundamentals of the Chinese economy will provide a solid basis for a "stable" functioning of China's currency market.

For his part, the chief economist of the Institute of the Financial Futures Market of China, Zhao Qingming, explained that "bonds generally occupy a large part of foreign currency reserves of many countries."

"The rise in the interest rate of the US Federal Reserve has led to a decrease in the prices of bonds worldwide, which also influenced the revaluation of China's foreign exchange reserves," he added.

In addition, the Japanese yen weakened by more than 2%, which resulted in depreciation of the yen assets that China had with its foreign exchange reserves.

According to estimates made by Zhao, Chinese currency reserves lost about 10,000 million dollars in nominal value due to the weakening of the yen.

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