China’s forex reserves drops to three years low

Beijing :China’s foreign exchange reserves, the largest in the world, posted the sharpest monthly fall in over three years in December at USD 3.33 trillion, official data reported today.

The fall in December extended a month-on-month decline of USD 87.2 billion dollars registered in November.

Foreign exchange reserves fell to USD 3.33 trillion at the end of last month, the lowest level in more than three years and down by USD 108 billion from November, the People’s Bank of China said.

The yuan has been heading south since the central bank revamped the foreign exchange mechanism in August to make the rate more market-based.

The yuan has been losing ground as the Chinese economy is expected to register its slowest pace of growth in a quarter of a century in 2015, state-run Xinhua news agency reported.

Meanwhile, the US raised interest rates in December and more rises are expected in 2016.

The onshore yuan, traded in the Chinese mainland, declined 4.05 per cent against the greenback in 2015.

China lowered the value of its currency by 0.51 per cent against the US dollar, marking the biggest drop since August.