(Yicai) Jan. 8 -- China’s foreign exchange reserves jumped to the highest point of last year in December as the US dollar index dropped, according to the latest data.

Forex reserves surged by USD66.2 billion to USD3.24 trillion from a month earlier as of Dec. 31, refreshing the 2023 high of USD3.2 trillion recorded in April, the State Administration of Foreign Exchange revealed yesterday. In November, China's forex reserves increased by USD70.6 billion, ending a three-month decline.

A decrease in the US dollar index last month caused financial assets to appreciate globally, driving up China’s foreign exchange reserves, while the country’s economic recovery also supported stable reserves of assets held by the central bank in foreign currencies, the State Administration of Foreign Exchange noted.

The economy is picking up, and foreign trade is becoming more resilient while expectations for the US Federal Reserve to cut interest rates increase, and the interest rate spread between China and the US is narrowing, Wen Bin, chief economist at China Minsheng Bank, said, adding that these are all favorable factors to improve China’s international balance of payments and they lay a foundation for the country’s foreign exchange reserves to climb.

China’s gold reserves jumped by 290,000 ounces to nearly 71.9 million ounces in December, achieving the 14th straight month of rising, the SAFE said. During last year, the country added more than 7.2 million ounces of such safe-haven asset.

As the credibility of the US dollar declines, countries are speeding up diversifying their foreign exchange reserves to reduce their dependence on a single currency, said Zhou Maohua, macro researcher of financial markets of China Everbright Bank. Raising gold reserves to a reasonable level will improve a country’s standing and financing capabilities in the international market, Zhou added.

Editors: Dou Shicong, Emmi Laine