CHINA’S foreign exchange reserves fell more than expected to an 18-month low in October amid rising U.S. trade frictions, suggesting authorities may be slowly stepping up interventions to keep the yuan from breaking through a key support level.

Reserves fell by US$33.93 billion in October to US$3.053 trillion, central bank data showed Wednesday.

The drop was the biggest monthly decline since December 2016, and compared with a fall of US$22.69 billion in September.

Economists polled had expected reserves to drop US$27 billion to US$3.06 trillion.

The foreign exchange regulator attributed the fall to adjustments in global asset prices and currency valuation effects caused by a 2.1 percent rise in the dollar index.

Net foreign exchange sales by China’s commercial banks are likely to be around US$3 billion in October, a drop of over 80 percent from September, the State Administration of Foreign Exchange said in a statement.

The yuan slipped closer to the psychologically important level of 7 per dollar in late October — a level last seen during the global financial crisis — though it has clawed back some losses in recent sessions on hopes that Sino-U.S. trade tensions may ease.

The yuan fell 1.5 percent against the dollar in October, its seventh straight monthly loss.

Policy sources have said that China is likely to use its vast reserves to stop any precipitous fall through the 7 level as it could risk triggering heavy capital outflows.

Recent Chinese data have pointed to rising outflows. But so far there have been no signs of a widespread flight of funds like that in 2015, due largely to capital controls put in place since then.

Sales of net foreign exchanges by Chinese commercial banks rose to the highest in September since June 2017.

The yuan, which has lost just over 6 percent of its value to the dollar so far this year, is expected to weaken further as authorities ease policy to support the slowing economy. (SD-Agencies)