(Yicai) May 8 -- China's foreign exchange reserves rose 1.3 percent in April from the month before, while its gold reserves increased for the sixth consecutive month, according to official data.

China's forex holdings expanded by USD41 billion to USD3.2817 trillion as of April 30 from March 31, mainly as a result of currency exchange rates and asset price changes, the State Administration of Foreign Exchange announced yesterday.

The US Dollar Index, a measure of the greenback's value relative to a basket of other currencies, dropped last month, while global financial asset prices showed a mixed performance, affected by the economic policies of major economies, growth prospects, and other factors, the SAFE said.

The US Dollar Index weakened 4.6 percent, while non-US dollar gauges generally appreciated. On the assets front, the Barclays Global Aggregate Total Return Index USD Hedged rose 1 percent, while the S&P 500 Index fell 0.8 percent.

The primary driver of last month’s increase in China’s forex reserves was the drop in the US Dollar Index, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.

But after the US introduced so-called reciprocal tariffs in April, global capital markets experienced heightened volatility, and major stock indexes mostly declined, weighing a little on the value of China's foreign exchange assets, Wang noted.

In the short term, the declines in the US Dollar Index and global financial markets will offset each other, likely allowing China’s foreign exchange reserves to remain broadly stable, Wang pointed out. This will provide a solid foundation for keeping the Chinese yuan at a reasonable and balanced level, he added.

The People's Bank of China increased its holdings of gold by 70,000 ounces to 73.77 million ounces last month, SAFE data also showed.

From November to April, the PBOC added 970,000 ounces of the precious metal, while its reserves had been steady for the six months prior to that.

Wang attributed the increase to new global political and economic changes after US President Donald Trump took office and the fact that gold prices are more likely to go on rising than fall. The unique hedging function of the yellow metal could have also played a role, he added.

As of Dec. 31, gold accounted for only 5.5 percent of China's official international reserve assets, much lower than the global average of around 15 percent. An increasing store of gold can also help enhance the credibility of China’s currency and create favorable conditions for the yuan’s internationalization, Wang noted, so the central bank is likely to continue adding to the nation’s holdings.

Editor: Futura Costaglione