(Yicai) Dec. 8 -- China’s foreign exchange reserves rose last month for the first time since July, mainly because of a stronger yuan and higher global financial asset prices. The country’s gold reserves also gained for the 13th straight month.

China’s forex reserves stood at USD3.17 trillion at the end of November, up 2.3 percent from the previous month, according to data released by the State Administration of Foreign Exchange yesterday. The figure came in at USD3.1 trillion in October, USD3.12 trillion in September, and USD3.16 trillion in August.

The main reasons for the rise in China’s forex reserves were the macroeconomic data of major economies, monetary policy expectations, exchange rate translation, the US dollar index decline, and the overall rise in global financial asset prices, the SAFE noted.

The US dollar exchange rate index fell 3 percent to 103.5 throughout November, while non-US dollar currencies appreciated overall, said Wen Bin, chief economist at China Minsheng Bank. In terms of assets, the US dollar-denominated Barclays Global Aggregate Total Return Index USD Hedged rose 3.4 percent, and the S&P 500 Index jumped 8.9 percent.

The fundamentals of China’s long-term economic growth remain unchanged, the SAFE said, adding that it will continue to support the stability of the forex reserves scale.

China’s endogenous economic momentum has strengthened, and exports have improved since the implementation of a series of supporting policies in the third quarter, causing the International Monetary Fund to raise China’s gross domestic product growth forecast for this and next year in November, Wen noted. Meanwhile, the net purchase and holdings of Chinese yuan-denominated bonds by foreign institutions increased last month from the previous one.

Since the beginning of the year, China’s forex reserves have remained stable at above USD3 trillion, mainly thanks to the country’s account surplus, long-term economic development, foreign direct investment inflow, and continuous increase in the attractiveness of Chinese-yuan-denominated assets, said Zhou Maohua, macro researcher at the financial market department of Everbright Bank.

Gold Reserves

China’s gold reserves widened for the 13th consecutive month in November, according to the latest official data.

As of Nov. 30, China had nearly 71.6 million ounces of gold, up 380,000 ounces from a month earlier, data released yesterday by the SAFE showed.

Geopolitical risks and banking crises in Europe and the United States pushed gold prices up, so central banks became more critical buying forces in recent years. Global central banks bought a record 1,136 tons of gold last year, with the purchasing trend continuing this year as well.

In the first three quarters of this year, global central banks bought 800 tons of gold, setting a new record for the period since the World Gold Council began to compile such data, according to the World Gold Council’s Gold Demand Trends Q3 report.

Global central banks have a strong demand for gold this year, but the future trends depend on whether the Federal Reserve Board’s actions can meet expectations or not, An Kai, head of research at the World Gold Council, told Yicai.

Editor: Futura Costaglione