Forex up 9th month in a row in October

Updated 2017-11-08 10:01:58 China Daily

China's foreign exchange reserves rose slightly in October, capping nine consecutive months of increases, thanks to effective capital flow management and improving economic fundamentals, analysts said.

Also, major fluctuations in the scale of the reserves are unlikely in the coming months, they said.

The reserves rose by 0 million last month to .109 trillion, compared with an increase of billion in September, according to central bank data released on Tuesday.

It was the first time the nation's reserves have climbed for nine months in a row since June 2014, and it marked the highest level since October 2016.

The State Administration of Foreign Exchange said appreciation of non-U.S. dollar currencies against the dollar and rising asset prices kept China's reserves basically stable in October. "China's foreign exchange supply and demand were basically balanced in October," the forex regulator said.

China's improving economic fundamentals are behind balanced cross-border capital flows and contribute to stability. "People in China and abroad have had more confidence in the country's long-term economic and social development following the successful 19th National Congress of the Communist Party of China," the statement said. It will help maintain the stability of the foreign exchange reserves, the statement said.

"The growth of reserves shows the country's economic fundamentals are in a stable and healthy state," said Dong Yuping, an economist at the Chinese Academy of Social Sciences.

China's recent strict cross-border capital flow management and its reform of its foreign exchange regime, such as using a countercyclical factor in fixing the yuan reference rate, have worked and helped stabilize the scale of the reserves, he said.

The reserves might drop slightly in coming months due to a strengthening dollar from a possible U.S. Federal Reserve interest rate hike. "The effect of the hike, even if it became a reality, would be less significant compared with previous ones, thus only having a minor impact on China's reserves," said Xie Yaxuan, chief analyst at China Merchants Securities.

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