China’s foreign exchange reserves posted their third-largest monthly decline on record last month, central bank data showed yesterday, renewing worries about capital outflows after reserves had appeared to stabilise.
Forex reserves fell $87bn in November, near the record $94bn decline suffered in August — the same month that the central bank surprised global markets by allowing the renminbi to depreciate by 3 per cent in three days.
China’s reserves have fallen for nine of 11 months this year and stand at $3.43tn, as investors sell renminbi assets to protect themselves against depreciation and the central bank sells dollars from its reserves to curb renminbi weakness. Falling interest rates in China and expectations of an imminent rate rise by the US Federal Reserve have also fuelled outflows. Reserves rebounded mildly in October, suggesting outflows had diminished.