China’s FX Reserves Continue Moderate Gains on Valuation Effects

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China’s foreign-currency holdings rose for a fifth month as lower government bond yields in developed markets lifted valuations.

• Reserves increased by $8.58 billion to $3.0988 trillion in March, the People’s Bank of China said Sunday

Key Insights

• The reading compares with $3.09 trillion from the previous month and the median estimate of $3.09 trillion in a Bloomberg survey of economists
• “Rising prices of developed markets’ government bonds likely contributed to some positive valuation effect,” although weaker foreign currencies caused some loss to the , according to Wang Tao, chief China economist at UBS Group AG. in Hong Kong
• The stockpile increased on price gains of financial assets in March, the State Administration of Foreign Exchange said in a statement, adding the holdings will likely remain stable due to higher flexibility of the yuan and reasonable economic growth.

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• The price of government bonds in major economies may rise further amid a worsening global economic outlook and dovish monetary policy

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