China’s foreign exchange reserves, the world’s largest, fell by $87.2 billion in November to $3.44 trillion, central bank data showed on Monday, the lowest level since February 2013 and the third largest monthly drop on record.
Analysts blamed the fall partly the dollar’s rally during November, which reduced the value of non-dollar reserves, and partly on China’s central bank selling dollars to support the yuan.
The onshore yuan is down over 3 percent so far this year, and remains under pressure as investors expect U.S. interest rates to be increased for the first time in around a decade later this month.
The fall in foreign exchange reserves was the biggest since a record monthly drop of $93.9 billion in August. China’s FX reserves have declined for the last five quarters and posted a record quarterly fall in the third quarter.
“The pick-up in capital outflows appears to have been predominately driven by increased expectations for renminbi (yuan) depreciation,” Julian Evans-Pritchard at Capital Economics said in a note.
“A rise in offshore interest rates due to the increased likelihood of a December Fed rate hike will also have added to outflow pressures.”