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China Foreign Reserves Fall to Lowest Since May 2012

China Foreign Reserves Fall to Lowest Since May 2012

Bradley Kearns, Contributor

Talking Points:

  • China’s foreign reserves fell to their lowest level since May 2012
  • Foreign reserves $3.23T in Jan. vs $3.21T expected and $3.33T in Dec.
  • Traders use the data to gauge the PBoC’s effort to offset economy risks

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Before the start of the trading week, the People’s Bank of China reported that foreign reserves totaled $3.23 trillion in January, higher than the $3.21 trillion forecast but a drop from December’s $3.33 trillion reading. The print was the lowest foreign reserves reading since May 2012.

Financial news-outlets have speculated that the drop in China’s reserves can be used as a measure to gauge the PBoC’s effort to mitigate capital flight and slow the Yuan’s depreciation. The globe’s second largest economy has been one of the primary catalysts for risk-off trading since the beginning of 2016. The markets’ are concerned about China’s economic slowdown and the ability of the government to smoothly transition to a service oriented economy.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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