China'S Capital Outflow Pressure Weakens SDR Valuation Shrink

In April, China's US dollar denominated reserves rose slightly for second consecutive months, but the data in a basket of currencies had shrunk.

According to figures released by the people's Bank of China on Saturday (May 7th), China's foreign exchange reserves in April amounted to 32197 billion US dollars, up from 32040 billion yuan, a slight increase over the previous 32126 billion, rising for second consecutive months, and the first consecutive two month increase since June 2014.

Reflecting the weakening of China's capital outflow pressure and reducing intervention by the central bank.

"The confidence of the market in stabilizing the renminbi is growing, and there is no strong desire to buy the dollar, which directly brought about an upturn in the capital outflow in April," Xie Dongming, an economist with overseas Chinese bank in Singapore, told Bloomberg before the data were released.

He said that in April, the exchange rate of a basket of currencies basically changed little compared with the March ratio.

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The increase in interest rates is expected to cool in April.

A sharp decline has pushed up the US dollar valuation of non dollar assets in foreign reserves, while the renminbi has stabilized against the US dollar. The expected market improvement has greatly reduced the pressure on capital outflows and the willingness of companies to hold foreign exchange declined.

Sue Trinh, head of foreign exchange strategy at RBC Capital Markets, predicted that exchange rate movements would have a positive impact of about $17 billion on April.

However, in recent months, the renminbi has stabilized against the US dollar, but a sharp decline in the basket currency led by the euro yen has led to a shrinkage in the foreign exchange reserve data released by the Central Bank of China today (SDR) as the unit of valuation.

Central bank data showed that foreign exchange reserves were 2 trillion and 270 billion SDR at the end of 4, representing a decrease of 8 billion 691 million SDR compared with March, a sixth consecutive month decrease.

People's livelihood securities analyst Guan Qing friends hint that the fact that excessive early passive appreciation caused excessive purchasing power of RMB still exists. The deficit in foreign exchange settlement has not reversed. The US interest rate increase will only be delayed.

Finally, today's data also show that the central bank increased about 11 tons of gold in April, and reserves 58 million 140 thousand ounces (1808.36 tons) at the end of 4, with a value of 57 million 790 thousand ounces (1797.47 tons).

China's end of 4

The total value is $74 billion 751 million, which is higher than the previous value of US $71 billion 485 million.

In April, the yuan dropped only 0.12% against the US dollar, but fell 5.48% against the yen and 1.11% against the euro.

The Central Bank of China has announced SDR valuation data since last month. The central bank said that this would help to reduce the valuation changes caused by frequent fluctuations in major countries' exchange rates, and also more objectively reflect the comprehensive value of foreign exchange reserves.