(Yicai Global) Dec. 23 -- The balance of Chinese yuan outstanding for foreign exchange held by the People’s Bank of China swelled by CNY35.4 billion (USD5.5 billion) in November, the biggest jump since October 2015, indicating that the central bank is increasing the base money supply for the purchase of forex assets.

China had CNY21.26 trillion (USD3.3 trillion) in funds outstanding for forex, which refers to the amount of local currency a central bank infuses into the market for the purchase of foreign exchange assets, the central bank said yesterday.

The FOFFE has risen 0.57 percent from January. This is largely due to high levels of liquidity worldwide, a stable yuan, good growth momentum and booming exports, experts said. But when compared to the growth in foreign exchange deposits from exports and capital inflows, it is not a large amount.

The growth is the result of the PBOC no longer buying dollars in order to sell the redback as it used to do and through the application of cautious macroeconomic strategies such as increasing forex reserves to help slow the yuan’s soaring appreciation, the Securities Times reported today, citing Wang Qing, chief macroeconomy analyst at Golden Credit Rating International.

The FOFFE will not continue to rise and its absolute amount remains stable, said Ming Ming, deputy director of Research Division at CITIC Securities. The yuan exchange rate goes up and down and will not always be attractive to foreign capital. Also economies in developed countries are cancelling easing policies to stabilize liquidity.

Editor: Kim Taylor