Chinese foreign exchange reserves declined in September

Chinese foreign exchange reserves declined at a faster pace in September, which leads to speculation that the central bank reinforces its attempts to defend its currency. The foreign exchange reserves fell by 18.79 billion USD from the previous month to 3.1664 trillion USD after in August the decline was 15.89 billion USD.

The contraction in the last month is the largest then in May this year, when reserves fell to 27.03 billion USD. The amount of reserves remained at their lowest levels since May 2011, when their size was 3.1660 trillion USD.

The decline in reserves suggests that the pressure of capital flight may be increased in September despite government attempts to tighten control over capital flows and to stabilize the yuan. According to many economists, this trend may continue if the US Federal Reserve decided to raise interest rates in the US later this year.

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