China No Longer Expanding FX Reserve

Yet more bad news for USD after PBOC’s Zhou said that they will hold a lower ratio of long dated US Treasuries to maturity. AUD may be at risk as well as PBOC has been aggressively buying AUD in the past few years.

The People’s Bank of China signaled it no longer benefits China to increase its foreign currency reserves that now exceed a record $3.7 trillion.

“It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor with the People’s Bank of China said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. “The marginal cost of accumulating foreign-exchange reserves has exceeded the marginal gains.”

Foreign-exchange reserves have risen from from $3.5 trillion at the end of June, a sign the government’s efforts to protect growth attracted money even as developing nations from India to Indonesia saw an exit of capital because of concern the Federal Reserve will taper stimulus.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu