China’s foreign exchange reserves fell in November to its lowest level in more than two years, raising worries over the outflow of capital from the world’s second-largest economy.
The decline, which followed a short-lived recovery in October, suggests that funds have resumed leaving China amid the country’s slowing economic growth and the expected rise in US interest rates, the Wall Street Journal reported.
China has been tightening its already stringent capital controls to keep needed funds within the country, the newspaper said.
At the end of November, its foreign exchange reserves declined by US$87.22 billion from the previous month to US$3.438 trillion, according to the People’s Bank of China.
That was the lowest level since February 2013, when reserves were US$3.395 trillion.
In October, China’s reserves rose by US$11.39 billion after five months of declines.
Standard Chartered economist Ding Shuang said the PBoC may have sold a net US$50 billion in reserves last month to prevent the yuan from weakening too fast.
The rest of the decline may have been due to the depreciation of the central bank’s non-dollar assets amid rising expectations of a US rate hike, he said.
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