A man walks past the headquarters of the People's Bank of China, the central bank, in Beijing File photo: VCG

China's foreign currency reserves fell by $15.54 billion to $3.1037 trillion in July, data from the State Administration of Foreign Exchange (SAFE), China's foreign exchange regulator, showed on Wednesday.

The decline was largely due to the negative impact of currency valuations, which caused a reduction of about $20 billion in reserves, read a note the Bank of Communications sent to the Global Times on Wednesday. 

The exchange rates of major currencies have declined against the US dollar for multiple reasons, including the global trade situation, the monetary policies of major central banks and geopolitical factors, said Wang Chunying, spokesperson and chief economist of the SAFE.

"Overall, China's foreign exchange market remained stable in July, as did China's cross-border capital flows," Wang said on Wednesday. "The monthly changes in the volume of foreign exchange reserves are normal fluctuations and remain stable on the whole."

The slight drop in the country's foreign reserves was announced just after the US said it would impose additional tariffs on Chinese goods starting on September 1 and declared China a "currency manipulator."

"China is unlikely to use its foreign exchange reserves to affect the yuan's exchange rate, and China has never done that as the US has claimed," Tan Yaling, head of the China Forex Investment Research Institute, told the Global Times on Wednesday. 

The Bank of Communications forecasts that China's foreign exchange reserves might see another slight decrease this month.

China has sound economic development and great potential in a resilient real economy and financial market, enabling it to cope with external shocks and to advance comprehensive reform and opening-up, said Wang. 

China's gold reserves stood at 62.26 million ounces (1,936.5 tons) at the end of July, up from 61.94 million ounces in June, the eighth consecutive month that the country increased its gold reserves.

"The rise in gold reserves is not related to the foreign currency reserves as the act is a normal operation of the central bank since 2005 to diversify China's reserves," said Tan.


Newspaper headline: Foreign reserves show slight decline due to yuan depreciation