(Yicai Global) Dec. 8 -- China's foreign exchange reserve inched up last month from the month before, marking two straight months of gains, on the back of a stronger US dollar and other factors, according to the latest data.

China’s forex reserves amounted to USD3.22 trillion at the end of November, adding USD4.8 billion from October, the State Administration of Foreign Exchange said yesterday. This is the seventh consecutive month that the holdings have stayed above USD3.2 trillion.

The foreign exchange reserve, denominated in US dollars, swelled last month due to exchange rate fluctuations and asset price changes, said SAFE spokeswoman Wang Chunying. The US dollar index gained 2 percent to 96, while non-dollar currencies moved in different directions. The Japanese yen rose 0.7 percent, the British pound slid 2.8 percent while the Euro fell 1.9 percent.

"It suggests that the central bank exited regular intervention in forex markets, especially given the US Federal Reserve's announcement in November that it would begin tapering this month," said Guan Tao, Boc International's Global Chief Economist.

Slight fluctuations in the forex reserves mainly reflect the impact of asset price and exchange rate fluctuations on their book value, he said. The stability of the reserves reflects the basic balance of China's international payments.

Real trade and cross-border capital flows also contributed to the continuity of the forex reserve size, said Wen Bin, chief researcher at China Minsheng Bank.

Transactions remained active on the forex market last month, with cross-border capital flow generally stable, Wang said. Bond prices in major economies mostly rose, impacted by the ongoing Covid-19 pandemic and expectations regarding different countries' monetary policies.

The forex reserve will continue to hold steady, Wen said. China’s economy continues to recover and macro policies keep the economy operating within an appropriate range, he said. Also, the recovery of the global economy supports trade and domestic securities investments remain attractive sp capital inflows are expected to continue, he added.

The Chinese economy is operating steadily as the government coordinates a scientific pandemic prevention and control response which upholds economic and social developments, Wang said. This helps keep the forex reserve generally stable.

Editors: Xu Wei, Kim Taylor