China’s foreign exchange reserves shrank to levels not seen for nearly four years, Beijing selling dollars to support the yuan, said Sunday the Chinese central bank (PBOC).
Huge China’s foreign exchange reserves have shrunk 99.5 billion in January, falling to 3.2 trillion dollars, the lowest level since May 2012, the PBOC said on its website.
Concerns about the Chinese economy condition weakened the national currency, which touched it its lowest level in five years.
The PBOC sells US dollars to support the yuan as the country seeks to stem massive capital flight out of China.
Some analysts believe that the national currency has not finished dragging and wonder about Beijing’s ability to react.
“If reserves [currency] represent a significant war chest, the pace at which they are melting in recent months is just awful,” said Rajiv Biswas, an analyst at IHS Global Insight in Bloomberg News.
This decline in reserves was however lower than that recorded in December -108 000 000 000 dollars – which was a record.
To try to limit the bleeding, China has tightened some capital controls mechanisms.
“The smallest decrease the level of reserves suggests that certain restrictions on capital outflows in January have paid off,” said Shen Jianguang, an analyst at Mizuho Securities.
China has set itself a target for 2016 economic growth “of 6.5% to 7%,” said a week before the NDRC, the country’s powerful planning agency.
Investors around the world are closely following the slowdown in the world’s second largest economy, which has caused turmoil on the financial markets.