THE country’s foreign exchange reserves rose slightly more than expected in January as the yuan rallied on hopes for progress in Sino-U.S. trade talks that could lift some pressure on the cooling Chinese economy.

China’s reserves rose by US$15.2 billion in January — the biggest increase in a year — to US$3.088 trillion, central bank data showed Monday. That compared with a rise of US$11 billion in December.

Economists polled previously had expected an increase of US$9.3 billion.

The relatively modest rise in China’s reserves in January was due to an appreciation of non-U.S. dollar currencies and increases of the prices of financial assets it holds, China’s foreign exchange regulator said in a statement.

The yuan appreciated 2.6 percent against the faltering U.S. dollar in January, hitting its highest level in over 6 months at one point, after falling 5.3 percent last year.

China’s foreign exchange reserves fell by US$67.24 billion in 2018, though they remain the world’s largest.

Developments in trade talks are expected to be the key determinant for the yuan’s direction in the near term.

Outflow pressure could be offset in part by growing foreign investments in Chinese stocks and bonds, though portfolio flows are highly sensitive to changes in foreign exchange and interest rates.

China’s stock regulator has predicted foreign inflows into shares will double this year from last, and starting in April Chinese bonds will be added into a major global benchmark index.

(SD-Agencies)