(Yicai Global) Feb. 12 -- China's foreign exchange reserves increased in value for the third consecutive month in January due to to fluctuations in exchange rates and changes in bond yields.
Forex reserves increased to USD3.1 trillion at the end of January, up 0.5 percent from the previous month. The value of Chinese holdings of foreign government bonds increased.
When converted into US dollar, the euro-denominated part of the forex reserves lost some of their value while the yen-denominated part gained, Wen Bin, the chief analyst of China Minsheng Bank, told Yicai Global.
The supply and demand in China's foreign exchange market was balanced in January, and cross-border capital flows were generally stable, said Wang Chunying, a spokesperson of the State Administration of Foreign Exchange, adding that major currencies rose against the US dollar and that the value of financial assets gained.
The global economic growth is facing downward pressures, and the international environment is unstable, Wang said. However, the Chinese economy maintains a slightly growing trend, and it boasts a self-balancing model regarding its cross-border transactions, she added.
The size of China's forex reserves have a sound expectation for stability, Wen said. Changes in valuations have contributed to the increase of such reserves while settlement banks and sales businesses have strengthened their support, Wen added.
In December, the deficit of foreign exchange settlement and sales by banks on behalf of clients narrowed by more than one half to USD7.1 billion. The total amount involved in contracts for forward settlement of foreign exchange with banks rose to a record high of USD9.6 billion since March 2014, while the surplus widened by USD5 billion, which indicates appreciation expectations for the redback. The data for January is still pending.
In January, major indicators of Chinese cross-border business activity, the New Export Orders Index and Purchasing Managers Index regarding imports, both rebounded from the previous month but yet remained in the contraction territory.
Editor: Emmi Laine