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China forex reserves at 6-year-low $3.185 trillion

 K J M Varma |  2016-09-08 23:42:48.0  |  Beijing

China's foreign exchange reserves, largest in the world, fell for the second consecutive month to $3.185 trillion in August, the lowest in six years as the yuan faced renewed pressure after the US hinted it might raise interest rates, officials said on Wednesday. 

China's foreign exchange reserves, which are the largest foreign exchange in the world, fell to $3.185 trillion in August from $3.201 trillion in July, the People's Bank of China (PBOC) said. If denominated in Special Drawing Rights, reserve assets of the International Monetary Fund, reserves fell to $2.284 trillion, state-run Xinhua news agency reported.

It was a decline for the second month running and brought reserves to their lowest level since the end of 2011. Due to concerns over a weak yuan and capital outflows, China's forex reserves have been in broad decline since last November, but returned to growth in March due to signs of stabilising economy, the report said. In June, there was an unexpected rise of $13.43 billion but fell by $16 billion in August. 

However, stronger market expectations for a US rate hike by the year's end have put the currency under pressure again, the report said. The yuan exchange rate composite index, which measures the currency's strength against a basket of currencies including the US dollar, euro and Japanese yen, came in at 94.33 at the end of August, down 1.06 per cent from a month earlier. People's Bank of China data also showed that the country's official gold reserves stood at $77.18 billion down from $78.89 billion in July.

Besides pressures faced by yuan against dollar, China is also stepping up its overseas direct investment, (ODI) $102.75 billion in the first seven months over taking the Foreign Direct Investment (FDI) of $77.13 billion as the per the official data released last month. 

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