China’s reserves dip by $94 billion

Beijing: China’s foreign exchange reserves, the world’s largest, shrank by $93.9 billion in August, the biggest monthly fall, reflecting the scale of intervention by the central bank to support the yuan after a devaluation last month.

 

The People’s Bank of China reported rese-rves had dropped to $3.557 trillion, having descended from a record $3.99 trillion in June 2014, as capital outflows escalated due to fears over China’s economic slowdown and prospects of rising US interest rates. “The drop was, in our view, due to capital outflows and heavy intervention to stabilise the currency after the fixing mechanism change last month,” said Dariusz Kowalczyk, senior economist/strategist at Credit Agricole CIB in Hong Kong. Meanwhile, China revised its growth rate in 2014 to 7.3 per cent from the previously released figure of 7.4 per cent.