China’s Foreign Exchange Reserves Decline to $3.1 Trillion

Global Times: As of the end of October, China’s foreign exchange reserves reached $3.1012 trillion, marking a decrease of $13.8 billion from the end of September, according to the State Administration of Foreign Exchange (SAFE). This decline represents the third consecutive monthly decrease, albeit with a narrowed extent compared to September.

The main factor contributing to the decrease is attributed to the strength of the U.S. dollar, resulting in a global depreciation of asset prices. Analysts and officials emphasized that despite the consecutive declines, China’s economic recovery is gaining momentum, and the fundamentals of the Chinese economy remain unchanged, contributing to the stability of foreign exchange reserves.

SAFE explained that the rise in the U.S. dollar index, influenced by monetary policy expectations, macroeconomic data of major economies, and geopolitical factors, led to a slump in the prices of global financial assets. Consequently, the decline in foreign exchange reserves is attributed to the combined effects of currency translation and changes in asset prices.

In October, the U.S. dollar index saw a 0.49 percent gain, and the dollar’s exchange rate against the yuan rose by 0.64 percent. Analysts pointed out that the depreciation of U.S. treasury bonds, driven by a global stock market decline that increased bond yields, added pressure on the value of global financial assets. Despite these challenges, China’s foreign exchange reserves have maintained overall stability, remaining above the $3.1 trillion mark, providing a foundation for the stability of the yuan.

Furthermore, data from SAFE revealed that as of the end of October, China’s gold reserves reached 71.20 million ounces, marking the 12th consecutive monthly increase. This demonstrates China’s ongoing efforts to diversify its reserves and strengthen its position in the global economic landscape.