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China June FX reserves unexpectedly rise to US$3.112t

[BEIJING] China's foreign exchange reserves unexpectedly rose in June, even as concerns of a full-blown trade war between China and the United States rattled markets.

Reserves rose US$1.51 billion in June to US$3.112 trillion, compared with a drop of US$14.23 billion in May, central bank data showed on Monday.

Economists polled by Reuters had expected reserves to drop by US$10.6 billion to US$3.10 trillion.

Capital flight was seen as a major risk for China at the start of 2017, but a combination of tighter capital controls and a faltering dollar helped the yuan stage a strong turnaround, bolstering confidence in the economy.

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In 2017, the yuan reversed three straight years of depreciation against the greenback and China's cross-border capital flows went from net outflows to basically stable.

However, the Chinese currency has started a losing streak against the US dollar since April this year and fell 3.25 per cent against the US dollar in June alone, its biggest monthly fall on record.

The value of China's gold reserves fell to US$74.071 billion at the end of June, from US$77.323 billion at the end of May.

REUTERS