China’s foreign exchange reserves rose for a second month in July, while gold reserves increased for a ninth month in a row, official data showed on Monday.
The continued growth of China’s gold and foreign exchange reserves reflects Chinese economy’s resilience and ability to withstand risks, analysts said.
Amid the complex and volatile global economy, the growth in foreign exchange reserves will exert a stabilizing effect on the domestic and foreign markets.
As of end-July, foreign exchange reserves stood at $3.2 trillion, up $11.3 billion, or 0.35 percent, from end-June, the State Administration of Foreign Exchange (SAFE) announced on Monday.
Foreign exchange reserves rose by $16.5 billion in June amid a depreciation of the yuan, the SAFE data showed.
China’s economy has great resilience and potential for development, and the long-term sound fundamentals have not changed, which is conducive to the basic stability of the reserves, the SAFE said.
“Influenced by the monetary policies and expectations of major economies and global macroeconomic data, the US Dollar Index has fallen, and global financial asset prices have generally risen. Due to exchange rate translation and asset price changes and other factors, the scale of forex reserves rose in July,” the SAFE said.
The yuan ended its depreciation against the US dollar in July. During the month, the central parity rate of the yuan against the dollar strengthened from 7.2258 to 7.1305, appreciating nearly 1.32 percent, the official data showed.
The People’s Bank of China, the central bank, increased its gold reserves in July for a ninth month in a row. The SAFE data showed that gold reserves as of end-July were valued at $135.36 billion, with 68.69 million ounces.
Analysts expect that China’s economic recovery will continue, while the scale of its foreign exchange reserves will remain basically stable.
“China’s economy is experiencing a steady recovery, bolstered by the resilience of its foreign trade and the growing appeal of yuan-denominated assets.
“Additionally, US interest rate hikes are approaching an end. These factors indicate that China’s forex reserves are expected to remain stable,” Zhou Maohua, an economist with China Everbright Bank, told the Global Times on Monday.
With the end of the US interest rate hikes, currency flows and overseas demand will increase, which will support China’s trade and investment, Tu Yonghong, a professor at the International Monetary Institute at Renmin University of China, told the Global Times on Monday.
“The GDP growth rate in the first quarter stood at 4.5 percent and 5.5 percent in the second quarter. Economic work conferences proposed tax cuts and other support policies, which have laid a long-term foundation and determined the economic development expectations of China. It is fair to say that the increase in forex reserves is the result of our economic improvement,” said Tu.
With foreign exchange reserves remaining stable above $3 trillion, China holds the top position globally, Zhou noted.
“This stability is beneficial for enhancing the risk resistance in China’s economy and financial system. It also helps strengthen the flexibility of macroeconomic policies,” Zhou said.
(Global Times)
