China’s foreign exchange reserves fell a record US$93.9 billion in August following Beijing’s attempts to halt a slide in the yuan and stabilize financial markets after a currency devaluation.
Figures unveiled by the People’s Bank of China Monday showed the nation’s forex reserves slumped to US$3.557 trillion last month, Reuters reported.
The decline left market watchers wondering how sustainable China’s efforts to support the yuan are, as capital flows out of the country due to fears of an economic slowdown and prospects of rising US interest rates, the report noted.
“Frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity,” Zhou Hao, senior economist at Commerzbank in Singapore, was quoted as saying.
The decline in reserves has quickened following China’s near 2 percent devaluation of the yuan on Aug. 11, which stoked fresh concerns about the economy and heavy selling of the currency.
Reserves have declined since a peak of nearly US$4 trillion in June last year.
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