Chinese reserves of gold keep growing – UOB

Economist Ho Woei Chen at UOB Group assessed the recent figures from FX reserves and gold holdings in the Chinese economy.

Key Quotes

“China’s official reserves assets fell US$17.0bn in September comprising US$14.7bn drop in foreign currency reserves and US$2.4bn decline in the gold reserves though its holdings of gold in volume terms has continued to rise to fresh record high of 62.6 mn ounces from 62.5 mn ounces in August. China has been adding to its gold reserves for 10 straight months since December 2018 after having kept it flat in 2017 and most part of 2018 in an apparent policy shift as trade tensions with the US escalate”.

“Overall, China’s foreign currency reserves were still up US$19.7bn YTD in September. While pressure on the economy has increased due to the escalating trade tensions with the US and RMB depreciation (3.5% depreciation vs USD YTD), capital outflows have yet to become a major concern compared to the period in mid-2014 to late-2016 when foreign currency reserves fell by about a quarter from about US$4 trillion to US$3 trillion. This is also shown in the relatively more balanced FX inflows/outflows trend compared to the period of 2014-2016”.

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