(Yicai Global) July 9 -- China's foreign exchange regulator expects reserves to remain stable despite fluctuations and an increase last month that ended two months of declines.

Reserves nudged up 0.05 percent to USD3.11 trillion (USD1.5 billion) as non-dollar currencies weakened against the greenback and asset prices changed, the State Administration of Foreign Exchange said on its website today.

The Chinese economy has improved steadily year to date, though diverging trends have emerged amid a global economic recovery and escalating trade frictions, placing pressure on some smaller economies related to capital outflows and currency devaluations.

China will deepen economic reforms and market deregulation and push forward with innovation-driven development, encompassing structural supply-side reform as a key driving force, SAFE added.

The economy is well positioned to maintain steady growth, underpinning the stability of the foreign exchange market, the regulator said. But the rise of trade protectionism has combined with interest rate hikes and balance sheet unwinding by the US Federal Reserve and a global liquidity squeeze to give rise to more external uncertainties, it added.

Editor: William Clegg