CHINA’S foreign exchange reserves fell less than expected in February as the yuan weakened on fears over the fast spreading coronavirus epidemic and its severe impact on economic activity.

The country’s hoard of foreign exchange, the world’s largest, decreased by US$8.78 billion on month to a three-month low of US$3.107 trillion at the end of February, according to data released by the People’s Bank of China on Saturday.

Economists polled had expected reserves would fall by US$15.497 billion to US$3.100 trillion, likely due to fluctuations in global exchange rates and the prices of foreign bonds that China holds.

Strict capital controls have helped China keep outflows under control over the past year despite a trade war with the United States and weakening economic growth at home.

But the yuan fell 0.78 percent against the U.S. dollar in February, its first monthly drop since August, while the dollar rose 0.77 percent as investors shifted money from virus-hit Asia into U.S. assets.

Weaker Chinese exports should have resulted in a shrinking trade surplus, contributing to smaller reserves, economists have said.

The reserve decrease reflected higher treasury prices in major economies and an appreciation in the U.S. dollar last month, the State Administration of Foreign Exchange said in a statement explaining the results.

The global economy and financial markets face increased uncertainties, the regulator said, adding the impact from the epidemic on China’s economy should be short-lived.

China held 62.64 million fine troy ounces of gold at the end of February, the same as at the end of January. (SD-Agencies)