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QINGDAO TODAY
在线翻译:
szdaily -> Markets -> 
Forex reserves rise as yuan posts rare gain
    2018-12-10  08:53    Shenzhen Daily

CHINA’S foreign exchange reserves unexpectedly rose in November for the first time in four months as the yuan posted a rare gain amid signs of a thaw in trade tensions between the United States and China.

China’s reserves, the world’s largest, rose by US$9 billion in November to US$3.062 trillion, central bank said Friday.

That marked the first increase since July and compared with a drop of US$33.93 billion in October, which raised concerns that the central bank was having to intervene more frequently in markets to support the faltering yuan currency.

Economists polled had expected reserves to drop US$16 billion to US$3.037 trillion.

The gain in November was due to changes in global currency rates and asset prices, according to China’s State Administration of Foreign Exchange, adding it expected reserve levels to remain stable despite market fluctuations.

Capital Economics said in a note that the People’s Bank of China appeared to have seen less need to intervene last month to support the yuan. It estimated the central bank likely sold around US$11 billion in foreign exchange last month, down slightly from October and pointing to a moderation in outflows.

The yuan has been under pressure this year from a host of factors, ranging from a strong dollar and the escalating Sino-U.S. trade spat to cooling economic growth at home, which has prompted authorities to shift to easier fiscal and monetary policy.

It eked out a 0.2 percent rise versus the dollar in November, its first monthly gain since March, supported first by domestic banks and later by news that U.S. President Donald Trump would meet his Chinese counterpart Xi Jinping to discuss trade at the end of that month.

The high-stakes talks culminated in an agreement between the United States and China to hold off on any additional tariffs for another 90 days while the two sides resumed negotiations to try to bridge their differences.

The news produced a strong bounce in the yuan two weeks ago, but gains have started to fizzle amid growing skepticism over whether the United States and China can reach a substantive deal on deeply divisive issues in such a short period of time.

“We believe that the exchange rate is likely to be an important issue in future trade negotiations, so the government will continue to strictly manage the yuan exchange rate and avoid sharp depreciation,” economists at UBS wrote. (SD-Agencies)

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