Chinese FX reserves little changed in July
China´s foreign exchange reserves were little changed in July as a higher trade surplus helped to offset a steady stream of capital outflows, reducing the need for the country´s monetary authority to sell foreign currencies to prop the value of the yuan.
Capital outflows from China remained near the $25bn pace observed since April, Capital Economics said in a research report sent to clients.
The country´s trade surplus, on the other hand, improved from $47.3bn to $52.3bn, with the think-tank anticipating a deficit of approximately another $35bn from the rest of the current account.
Taking into account the impact of exchange rate fluctuations and valuation effects on the value of its reserves, then the figures suggested that the People´s Bank of China was able to reduce its FX sales - in order to buoy the yuan - from $15bn in June to $7bn in July, the think-tank estimated.
The PBoC´s reserves thus decreased by $4.1bn in July to $3,201bn (consensus: $3,200bn) as the People´s Bank of China slowed its FX sales.