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China Dec forex reserves fall less than expected to US$3.011t

Saturday, January 7, 2017 - 11:26

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China's foreign exchange reserves fell for a sixth straight month in December but by less than expected to the lowest since February 2011, as authorities stepped in to support the yuan ahead of US President-elect Donald Trump's inauguration.

[BEIJING] China's foreign exchange reserves fell for a sixth straight month in December but by less than expected to the lowest since February 2011, as authorities stepped in to support the yuan ahead of US President-elect Donald Trump's inauguration.

Reserves fell by US$41 billion last month to US$3.011 trillion, central bank data showed on Saturday, following a drop of US$69.06 billion in November.

Economists polled by Reuters had expected reserves to drop US$51 billion to US$3.001 trillion, from US$3.052 trillion at the end of November.

The yuan depreciated 6.6 per cent against the surging dollar in 2016, its biggest one-year loss since 1994, and is expected to weaken further this year despite authorities' latest attempts to slow its descent.

sentifi.com

Market voices on:

Adding to pressure on the currency, Mr Trump has vowed to label China a currency manipulator on his first day in office on Jan 20 and has threatened to impose huge tariffs on imports of Chinese goods.

While the world's second-largest economy still has the largest stash of forex reserves by far, it has burned through half a trillion dollars since August 2015, when it stunned global investors by devaluing the yuan.

If forex reserves continue to be depleted at a rapid pace and capital flight continues, some strategists believe China's leaders may have little choice but to sanction another big"one-off" devaluation which would roil global financial markets.

China's gold reserves fell to US$67.878 billion at end-December from US$69.785 billion at end-November.

REUTERS

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