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Forex reserves enough to deal with external challenges

By Wang Yanfei | chinadaily.com.cn | Updated: 2017-01-19 13:36

China has enough foreign exchange reserves and measures to cope with shock from US interest rate hike, spokeswoman of the nation's top currency regulator said on Thursday, one day before president-elect Donald Trump assumes office.

Wang Chunying, spokeswoman with the State Administration of Foreign Exchange Reserve, said that forex reserves remain abundant to deal with external challenges, after the US Federal Reserve increased the rates by 0.25 percent in December.

Wang said the administration is well-prepared to deal with any abnormal fluctuation of capital flows.

The measures will be carefully studied before roll out, she said.

Data from the SAFE on Friday shows that Chinese banks continue to see month-on-month net foreign exchange sales in December.

In December, the deficit in sales and purchase of foreign exchange reached 298.3 billion yuan, a record high since January last year.

Data shows that China's corporates and individuals continue to hold on their forex, which is a sign that yuan depreciation expectations remain.

Short-term capital outflows pressure persists, but would not sustain for long, according to Wang.

Chinese banks saw net forex sales valued $51 billion in the fourth quarter, which is way lower than the $124.8 billion?level in the first quarter, according to the SAFE.

"Forex demand from individuals declined in the first month this year," said Wang, adding that fluctuation of forex reserves level is normal.

"There should not be too much reading into a headline number," she said.

China's forex reserves fell to near a six-year low in December, a bit higher than the critical $3 trillion level.

There has been much discussion over how yuan's exchange rate would be like as Trump's inauguration on Friday approaches, who has repeated his claim that China is a currency manipulator.

Wang said there would not be major capital flight in the long-run, as economic fundamentals remain sound.

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