China’s foreign-exchange reserves fell by a record last quarter as the central bank sold dollars to support the yuan after a surprise devaluation spurred bearish bets on the currency.
The stockpile plunged by $US180 billion in the three months through September, the most in data going back to 1995, to $US3.51 trillion, according to Bloomberg calculations based on data released by the People’s Bank of China. The reserves fell $US43.3 billion in September, after an unprecedented $US93.9 billion drop in August.
The slowing in forex reserve sales suggests wider capital flight eased, perhaps owing to China’s regulatory efforts to curb it or the slightly improved tone in markets. It may reassure some but that trend is no danger at all…
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
