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Reserves Rise Further in July as Exchange Rate, Economy Steady

2017-08-08 18:16:59

China's foreign exchange reserves rose for a sixth straight month in July as the yuan's exchange rate against the US dollar held relatively stable and domestic economic growth was better than expected, official data showed.


At the end of July, China's foreign exchange reserves stood at $3.08 trillion, increasing 0.8 percent from the previous month, according to data released by the State Administration of Foreign Exchange (SAFE).


"In July, the country's cross-border capital flows maintained stable momentum and foreign exchange demand tended to be basically balanced," an unidentified SAFE official said in response to a question posted on the agency's website.


The official said that robust domestic economic growth in recent months and a stable exchange rate contributed to the steady growth in reserves.


The economy grew 6.9 percent year-on-year in the first half of 2017, accelerating 0.2 percentage points from a year earlier, according to the National Bureau of Statistics.


Global financial markets were also relatively stable during the month, and demand and supply in the foreign exchange market was basically balanced. and the yuan's exchange rate remained "basically stable," the official said. The yuan strengthened 0.8 percent in July to 6.7290 per US dollar at the end of the month, according to Bloomberg.


Given these conditions "foreign exchanges purchases by individuals and companies have become more rational," the SAFE official said.


Also, China's recent crackdown on what officials describe as "irrational" overseas investments might have boosted reserves in July, according to Rajiv Biswas, Asia-Pacific chief economist for IHS Markit.


"The improvement in China's FX reserves in July reflects the ramping up of efforts by Chinese authorities to curb capital outflows through clamping down on corporate outbound M&A deals as well as tougher regulations on private individual remittances for foreign property purchases," Biswas said in a note sent to the Global Times on Monday.