China’s March Forex Reserves Fell to 17-Month Low
China’s foreign-exchange reserves plunged to a 17-month low in March as the coronavirus pandemic roiled the global financial market.
The country’s hoard of foreign exchange fell $46.09 billion from the previous month to $3.061 trillion, the lowest level since October 2018, data from the People’s Bank of China showed Tuesday.
The decline in reserves was the largest monthly drop in more than three years. Economists polled by The Wall Street Journal expected an $8 billion decline in reserves in March, roughly matching February’s $8.78 billion decrease.
The result was due to factors including a strong U.S. dollar and the adjustment of prices of other reserve assets amid the coronavirus pandemic, the State Administration of Foreign Exchange said after the data release.
The foreign-exchange regulator said the global economy and trade will probably face “severe shocks” from the pandemic and geopolitical tensions, which could lead to more volatility in global financial markets.
The U.S. dollar index climbed 0.85% in March after rising 0.80% in February, according to Wind. The onshore Chinese yuan dropped nearly 1.5% last month against the U.S. dollar.
Tuesday’s data could renew concerns about increased capital-outflow pressure faced by the Chinese economy, although the foreign-exchange regulator said the size of the reserves should be largely steady as the government pushes for businesses to resume operations.
Source: Dow Jones