dollar yuan Photo:Xinhua

China's foreign exchange reserves decreased by $44.2 billion to $3.16 trillion as of the end of August 2023, representing a decline of 1.38 percent compared with the end of July. 

The decrease in reserves can be attributed to various factors, including the impact of exchange rate conversion and changes in asset prices, according to China’s State Administration of Foreign Exchange (SAFE) on Thursday.

The rise in the US dollar index and overall decline in global financial asset prices also contributed to the decline in reserves, it said.

The slight fluctuation in China's foreign exchange reserves is normal given the recent significant volatility in global financial market, Zhou Maohua, an economist with China Everbright Bank told the Global Times on Thursday.

It is worth noting that the fluctuation in China's foreign exchange reserves in August was relatively low compared to the volatility in the US dollar, US stocks, US bonds, and commodity markets, Zhou said.

Viewing long-term trends, foreign exchange reserves are expected to continue to remain stable, Zhou said.

Additionally, China adds gold reserves for the tenth consecutive month in August. According to data from the People's Bank of China, China's gold reserves at the end of August stood at 69.62 million ounces (about 2,165.43 tons), up 930,000 ounces from the previous month. 

The Chinese central bank's increase in gold holdings is primarily aimed at optimizing the structure of official reserve assets, promoting diversification of official reserve assets, and enhancing the ability to withstand global financial market volatility and asset stability, Zhou said.

As the creditworthiness of the US dollar declines and global financial markets experience significant volatility, the diversification of foreign exchange reserves among countries is expected to continue, Zhou said.

According to SAFE, China's economy continues to demonstrate robust potential and vitality. The positive factors for long-term growth remain unchanged, which is conducive to maintaining stable foreign exchange reserves.

Global Times