Chinese FX reserves edge higher in February, pointing to scant pressure on yuan
China's foreign exchange reserves were little changed last month, pointing to scant downside pressure on the country's currency, but some analysts believed that state-of-affairs would soon be put to the test.
According to the State Administration of Foreign Exchange, the country's foreign exchange reserves edged up by just $2.0bn in February to reach $3.09trn.
Beijing attributed the increase in reserves to movements in FX rates and changes in the value of the assets held by the People's Bank of China, but Chang Liu at Capital Economics had been expecting a small drop due to valuation effects.
In any case, Chang said the most important bit of information that could be gleaned from the report was that China's central bank did not intervene in FX markets last month.
The economics consultancy also estimated that Chinese assets registered net capital inflows of $15bn in February, after $7bn in outflows during January, although they cautioned that the timing of the country's New Year could distort the data.
"Downward pressure on the renminbi has diminished recently as US-China trade tensions have eased and US bond yields have fallen," it said.
"But we expect it to return over the months ahead as China's economy continues to slow and interest rates in the country fall further."