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Saturday, January 7, 2017, 12:34

Yuan stabilization efforts 'behind forex reserve fall'

By Agencies

BEIJING - The central bank's efforts to stabilize the Chinese yuan is the major reason for China's falling foreign exchange reserve, the forex watchdog said Saturday.

The People's Bank of China (PBoC)'s forex market operations, price fluctuations of the forex reserve's investment assets and exchange rate against the dollar have influenced China's forex reserve, according to a statement released by the State Administration of Foreign Exchange (SAFE).

China's forex reserve continued to shrink in December, but the overall annual drop in 2016 narrowed year on year

China's forex reserve continued to shrink in December, falling for the sixth straight month, but the overall annual drop in 2016 narrowed year on year, official data showed Saturday.

Reserves fell by $41 billion last month to $3.011 trillion, central bank data showed on Saturday, following a drop of $69.06 billion in November.

China's reserves fell nearly $320 billion in 2016, after a drop of $513 billion in 2015.

China has stepped up efforts in recent weeks to shore up the yuan and curb capital outflows.

SAFE said in late December that net cross-border capital outflows were expected to narrow in the fourth quarter in 2016.

The PBoC said in a quarterly report last Friday that it would push reforms of the yuan regime, while keeping the currency basically stable in 2017.

The PBoC also raised reporting requirements for overseas transfers last Friday. Reporting threshold for cash and overseas transfers cut to 50,000 yuan from 200,000 yuan.

SAFE recently said it would step up monitoring of individual foreign exchange purchases to close loopholes, but the $50,000 yearly quota would not change.

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