The world’s largest foreign currency stockpile has been steadily rebounding since last January, when it fell below $3trln for the first time in almost six years after the central bank propped up the yuan. The currency has come roaring back with authorities keeping a tight grip on money flowing out of the country and full-year economic growth set to pick up.
“The effective implementation of capital controls, most clearly shown in the crackdown on the activities of the corporate raiders, has greatly reduced the volume of external flows,” Michael Shaoul, chief executive of Marketfield Asset Management in New York, wrote.
China’s currency regulator, the State Administration of Foreign Exchange (Safe), cited gains in the value of non-dollar currencies for last month’s rise and said the nation’s economic performance had contributed to stable cross-border capital flows for the year. Looking ahead, Safe predicted the reserves, and the balance of payments, would be “stable”.