FX.co ★ China's foreign exchange reserves surge in August

Analysts estimated that China's foreign exchange reserves, the world’s largest, increased significantly in August 2020 for the fifth month in a row.

Experts suggested that the trade balance surplus and a stronger renminbi contributed to the spike in the country’s foreign exchange reserves. In August, the US dollar fell by about 1.8% against the yuan.

According to the People's Bank of China (PBOC), the volume of China’s foreign exchange reserves surged by $10.2 billion to $3.165 trillion in a month, the highest since December 2016.

Despite a substantial rise in reserves, analysts expected more significant growth. For example, The Wall Street Journal projected a $16 billion rise, while Trading Economics anticipated a $22 billion increase.

In the last summer month, Chinese exports spiked by 9.5% compared to the same period in 2019. Meanwhile, the volume of imports plummeted by 2.1%. As a result, China had a $58.93 billion trade surplus, the PBOC noted.

At the same time, China's gold reserves also edged down to $122.62 billion in August this year from $123.09 billion recorded in July.