China’s foreign-exchange reserves suffered the largest monthly fall in almost two years in October, the Wall Street Journal reports. The figures suggest that Beijing is dipping into its reserves to help strengthen its currency against a strong dollar.
Reserves shrank by $33.93 billion in October, according to central bank data, a drop not seen since December 2016 amid a capital flight crisis in China. This was the third straight month of decline and an uptick from September’s $22.7 billion fall.
The State Administration of Foreign Exchange said the stronger dollar was behind the decline, which was weakened by a number of assets included in the reserves, including third currencies.
There is also the likely impact of the government trading currencies to bolster the renminbi, which has been edging closer and closer to a key threshold level against the dollar. Chang Liu, an analyst at Capital Economics, estimates that China’s central bank may have sold up to $14 billion in foreign exchange last month.