China’s Foreign Exchange Reserves Rose on Weaker Dollar

(Bloomberg) --

The value of China’s foreign-currency holdings edged up in December due to valuation effects and a possible easing of capital outflows due to a a stronger yuan.

• Reserves climbed to $3.1079 trillion from $3.0956 trillion in November, the People’s Bank of China said Tuesday

Key Insights

• The reading is slightly lower than the median estimate of $3.11 trillion in a Bloomberg survey of economists
• “Capital outflow pressures may have eased a bit in December, as the yuan appreciated by 0.9% at end-December versus end-November,” Wang Tao, chief China economist at UBS Group AG. in Hong Kong, wrote before the data was released. “We estimate December’s valuation effect from reserve currencies’ movement at a gain of $15-20 billion,” as the dollar weakened against other reserve currencies and boosted the value of assets denominated in euro and yen, she wrote.
• “China’s foreign exchange market was stable, international payments were balanced,” the State Administration for Foreign Exchange, which manages the reserves, said in a statement, adding that sound economic growth will support an overall stable reserves stockpile.

--With assistance from Tomoko Sato and Yinan Zhao.

To contact Bloomberg News staff for this story: Lin Zhu in Beijing at lzhu243@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger

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