(MENAFN- AFP) China's foreign exchange reserves plunged by $69 billion in November to a five-year low, according to central bank data released Wednesday, as policy-makers battled to support the yuan currency against a resurgent dollar.
The world's largest hard-currency stockpile dropped to $3.05 trillion, its fifth-straight monthly contraction and the largest month-on-month decline since January, the People's Bank of China (PBOC) said.
Stubborn capital outflows and official attempts to shore up the yuan by selling foreign exchange were the likely main causes, Capital Economics said in a research note, adding the fall was slightly larger than expected.
The yuan has slid against the dollar, plumbing eight-year lows in recent weeks.
The dollar has been lifted by growing expectations of a Federal Reserve interest rate hike by year's end, which could encourage a tide of capital flowing toward US assets.
For China's government, the capital-flight fears have been compounded by a record-setting spree of overseas investment by Chinese companies.
Chinese authorities have sought to stem the outflows by placing new restrictions on overseas investment.
"This increase in capital outflows does seem to have unnerved Chinese policy-makers who in recent weeks have moved to tighten capital controls," Capital Economics China economist Julian Evans-Pritchard said in the research note, but added it was "premature" to talk of a renewed crisis in the yuan.
But tighter capital controls "run against any hopes of reform or internationalisation of the yuan", Michael Every of Hong Kong's Rabobank NA told Bloomberg. "And all these fun and games come before we have even seen President Trump."
China, which manages the yuan's movement, has in recent months steadily weakened the rate around which the currency is allowed to trade.
Last month it put it beyond 6.9 to the dollar for the first time in more than eight years as the surging greenback pressured the Chinese unit.
It has come back slightly since then. Wednesday's reference rate was at 6.8808 yuan to the dollar.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.