China's foreign currency reserves fell $38.1 billion, more than expected
The State Administration of Foreign Exchange said on Wednesday, October 7, Beijing time, that reserves stood at $3.4 trillion at the end of September
Key takeaways
China's foreign currency exchange reserves fell to US $3.4003 trillion at the end of September, the State Administration of Foreign Exchange (SAFE) said on Wednesday, Beijing time. This was a decline of $38.1 billion, or 1.11%, from August. Economists in a Reuters poll had expected a fall of $18.4 billion, to $3.420 trillion, about half as much.
The fall was smaller than the $85.7 billion drop SAFE reported for March. However, August's $3.4384 trillion reserve total was only $3.8 billion short of May's $3.4422 trillion, China's highest level of foreign currency reserves in more than ten years.
The figure counts the foreign currencies and securities China holds, converted to US dollars. A higher dollar, or a fall in the price of those assets, can shrink the total even if China sells nothing.
The agency said both happened in September. The dollar index, a measure of the greenback against other major currencies, rose 2.03% over the month, and prices of major financial assets generally fell. The yuan strengthened 0.22% against the dollar over the same month.
SAFE gave no breakdown between a price change and money moving in or out of China's reserves.
More gold, worth less in dollars
On a separate line of SAFE's official reserve assets release, the People's Bank of China reported gold holdings of 77.47 million ounces, up from 76.73 million in August. The central bank added 740,000 ounces, more than the 650,000 ounces it added in August. That was the 23rd month in a row of additions.
The dollar value of that gold still fell, to $323.5 billion from $350.1 billion. The ounce count went up, so the drop of $26.6 billion is a lower price, not gold sold. Gold itself fell 6.6% in September.
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Frequently asked questions
How did the September drop compare with forecasts?
Economists in a Reuters poll had expected a fall of $18.4 billion, to $3.420 trillion, about half as much.
Did China have to sell assets for reserves to fall?
SAFE said the dollar rose and prices of major financial assets generally fell, but gave no breakdown between a price change and money moving in or out.
Was this the biggest recent decline in reserves?
The fall was smaller than the $85.7 billion drop SAFE reported for March.
Did China's official gold holdings fall as well?
No: the central bank added 740,000 ounces, to 77.47 million ounces, while the dollar value of that gold fell to $323.5 billion on a lower price.
