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
China’s FX Reserves Continue Moderate Gains on Valuation Effects

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 value, 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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