Expectations that the yuan will devalue further have boosted demand for the US dollar, forcing China’s central bank to sell off US$87.2 billion in foreign reserves to prop up the former currency’s value, bringing down its holdings to US$3.44 trillion as of the end of November, South China Morning Post reported. “The pick-up in capital outflows appears to have been predominately driven by increased expectations for renminbi depreciation,” Capital Economics China economist Julian Evans-Pritchard said in a note. “A rise in offshore interest rates due to the increased likelihood of a December Fed rate hike will also have added to outflow pressures.”
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