Data from the People’s Bank of China, China’s central bank, showed that China’s foreign currency reserves shrank by US$319.84 billion in 2016.
The decrease, according to China’s State Administration of Foreign Exchange (SAFE), happened mostly in the latter half of 2016, during which the US dollar continued to appreciate, causing other currencies to depreciate. The central bank’s move to stabilize the yuan by selling US dollars is also a reason behind the drop, according to SAFE.
Given the currency fluctuations, many analysts believe that it is possible for the Chinese foreign currency reserves to keep falling, but that the margin will further narrow.
Since the end of 2016, SAFE has tightened its control on personal purchase of foreign currencies, especially in banned fields, such as purchasing houses and investing in stocks and securities overseas.
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