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

[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.

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