Interventions to support the renminbi amid strong capital outflows have caused the central bank’s foreign reserves to decline for seven straight months through January, followed by a modest uptick in February.
China has the world’s largest foreign reserves, but they have fallen by roughly a quarter, to just above $3 trillion.
We are watching: How low will they go? People’s Bank of China (PBoC) Governor Zhou Xiaochuan has said policy support for the renminbi can be sustained, but we are alert to the potential for more volatility if capital outflows continue.