China steps up FX interventions in November to brake Yuan weakness

The strength of the US dollar forced Chinese authorities to step-up the pace of their interventions on the foreign exchange markets in order to keep the yuan from strengthening too quickly.

Asia´s largest economy saw the value of its international reserves drop by $69bn in November to reach $3.052bn, versus the $3.060bn which economists had been expecting.

It was also the largest outflow since the start of the year when concerns regarding undue weakness in the Chinese currency, the yuan, last peaked.

The figures implied that the foreign exchange sales by the People´s Bank of China jumped from $40bn in October to roughly $50bn in November, according to Julian Evans-Pritchard, China economist at Capital Economics.

They also pointed to an acceleration in net capital outflows from $69bn in October to about $80bn, which appeared to have unnerved officials in Beijing.

Hence their move in recent weeks towards capital controls.

Nonetheless, Evans-Pritchard added, "the latest surge in the dollar will not be repeated in the coming months, making it easier for the PBOC to engineer a return to a more gradual pace of renminbi depreciation against the US currency."