China's January forex reserves rise to $3.088 tril


China's foreign exchange reserves rose slightly more than expected in January as the yuan rallied on hopes for progress in Sino-U.S. trade talks.

China's reserves rose by $15.2 billion in January to $3.088 trillion, central bank data showed on Monday. That compared with a rise of $11 billion in December.

Economists polled by Reuters had expected an increase of$9.3 billion to $3.082 trillion.

The yuan gained 2.6 percent against the dollar in January on hopes that China and the United States were edging closer to a deal to end their bruising trade war. The greenback has also been pressured by the Federal Reserve's shift to a more cautious outlook on further interest rate hikes.

The value of China's gold reserves rose to $79.319 billion from $76.331 billion at the end of December.

© (c) Copyright Thomson Reuters 2019.

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Holding this much reserves only makes sense if China has a large amount of US dollars and its keeping its currency pegged to the US so it can exercise more control over US dollar rates. Also, it works to hold large amount of back up currency that is not linked to your currency as a way of hedging against the fall of your own currency and protecting your economy in such an event.

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Alternatively it suggests that China has identified a figure of foreign reserves that it needs to maintain in order to accomodate a market governed Currency..... So where is the Yuan valued in the unofficial market these days ?

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