China’s reserves fall the most in 5-1/2 years amid slowdown concerns


China’s foreign exchange reserves fell by $68 billion in April, the biggest fall in five and a half years, official data showed on Saturday, as the dollar rose while foreign investors dumped Chinese stocks amid concerns about the slowing economy.

The country’s foreign exchange reserves — the largest in the world — fell to $3.12 trillion last month from $3.188 trillion in March, the biggest monthly decline since November 2016.

Analysts polled by Reuters had expected reserves to fall to $3.133 trillion in April.

The State Administration of Foreign Exchange (SAFE) said in a statement that April’s 2% fall in reserves from March was mainly due to valuation effects as the dollar strengthened against other major currencies and changes in global asset prices.

“In April 2022, China’s cross-border funds generally continued the trend of net inflows, and supply and demand in the domestic foreign exchange market remained essentially balanced,” SAFE said.

The yuan fell 4% against the dollar in April, while the dollar rose 5% against a basket of other major currencies in April.

Foreign investors extended their sale of Chinese stocks into April amid mounting concerns about the impact of the ongoing COVID-19 lockdown and the fallout from the Ukraine-Russia war.

China’s foreign exchange reserves fell by $130 billion in the first four months, official data showed. They had reached $33.6 billion in 2021.

China held 62.64 million troy ounces of gold at the end of April, unchanged from the previous month. The value of China’s gold reserves fell to $119.73 billion at the end of April from $121.66 billion at the end of March.

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