(Yicai Global) Feb. 8 -- China’s foreign exchange reserves fell in January from the month before, but stayed above USD3.2 trillion for the ninth consecutive month, because of a moderate appreciation in the US dollar and a decline in global financial asset prices.

China’s forex reserves came to USD3.22 trillion at the end of last month, down USD28.5 billion from December, data released by the State Administration of Foreign Exchange showed yesterday.

“The forex market has maintained stable operation in January, with domestic supply and demand for forex remaining basically balanced,” SAFE spokesperson Wang Chunying told a news conference.

The slight dip in reserves was the result of factors such as monetary policy expectations in major economies, geopolitics and macroeconomic data contributing to a gain in the US dollar index and a general decline in the value of international financial assets, according to Wang.

The US dollar index jumped 0.9 percent to 96.5 last month, while the euro and the UK pound fell 1.2 percent and 0.6 percent, respectively. The Japanese yen was unchanged. The Barclays Global Aggregate Total Return Index, which tracks the performance of global investment grade fixed income securities and is denominated in US dollars, dropped 1.6 percent.

The change in valuations was the main reason for the decline, Wen Bin, chief analyst at China Minsheng Bank, told Yicai Global, while real trade and cross-border capital flows contributed to the basic stability of foreign exchange reserves.

China's new export orders index, a sub-gauge of the purchasing managers index, ticked up to 48.4 in January from 48.1 in December. The US PMI remained high at 57.6, while the PMIs for Japan and the eurozone rebounded, indicating robust external demand. Northbound funds, those that flow to the Chinese mainland from Hong Kong via the stock connect programs, had a net inflow of CNY16.8 billion (USD2.6 billion).

All of these factors will support the stability of China's foreign reserves, Wen noted.

The Covid-19 pandemic continues, heightening external uncertainties and volatility in global financial markets, Wang said, noting that China's economic fundamentals remain unchanged and will provide strong support for the overall stability of its forex reserves.

Editors: Xu Wei, Futura Costaglione