BEIJING: China’s foreign currency regulator is not concerned by signs of foreign exchange (forex) outflows as the economy slows, the country’s foreign exchange regulator said on yesterday, saying a recent decline in forex reserves is in line with Beijing’s policy goals.
China was closely monitoring the impact of any changes in United States monetary policy, amid signs of greater volatility in cross-border flows, said Guan Tao, head of the department of international payments at State Administration of Foreign Exchange (Safe).
“Capital inflows are swinging into outflows due to recent two-way fluctuations in the yuan exchange rate and the complex external and internal environment, which is normal,” Guan said.
China’s foreign exchange reserves fell by about US$100 billion (RM327 billion) in the third quarter to US$3.89 trillion at the end of last month, central bank data showed.
Some analysts said the decline suggested speculative “hot money” outflows from China amid increased market jitters about whether the world’s second-largest economy might be at risk of a slowdown.
Guan said the decline in reserves was mainly caused by a recent rise in the US dollar against other major currencies, which reduced the dollar value of the proportion of the reserves held in other currencies.
“The slowdown in growth of foreign exchange reserves will become a new normal and is in line with the direction of reforms,” he said.
The central bank was exiting from regularly intervening in the foreign exchange market, he added.
China’s vast factory sector grew a shade faster this month as firms drew more foreign and domestic orders, a private survey showed yesterday, but analysts say the modest growth does not indicate a turnaround for the cooling Chinese economy. Reuters