China foreign reserves in record quarterly drop on yuan intervention

China's foreign-exchange reserves fell by a record last quarter as its central bank sold dollars to support the yuan.
China's foreign-exchange reserves fell by a record last quarter as its central bank sold dollars to support the yuan.PHOTO: REUTERS

HONG KONG (BLOOMBERG) - China's foreign-exchange reserves fell by a record last quarter as the central bank sold dollars to support the yuan after a surprise devaluation spurred bearish bets on the currency.

The stockpile plunged by US$180 billion (S$255.8 billion) in the three months through September, the most in data going back to 1995, to US$3.51 trillion, according to Bloomberg calculations based on data released by the People's Bank of China on Wednesday (Oct 7). The reserves fell US$43.3 billion in September, after an unprecedented US$93.9 billion drop in August.

The PBOC devalued the yuan and switched to a more market- oriented reference rate on Aug 11, sending the currency into its biggest tumble in two decades. The move prompted analysts from Standard Chartered to Commerzbank to cut their forecasts for the currency.

An estimated US$141.66 billion left China in August, exceeding the previous record of US$124.62 billion in July, data compiled by Bloomberg show.

The Chinese central bank has been intervening in both the onshore and offshore currency markets to prop up its exchange rate. The yuan in Shanghai rose 0.3 per cent in September, after losing 2.6 per cent the previous month. In Hong Kong, the currency strengthened after the reserves data, trading 0.06 per cent higher at 6.3503 per US dollar. China's onshore financial markets will resume trading on Thursday after a week-long National Day holiday.