MNI 5 THINGS: China FX Reserves Fall $22.7 Billion In Sept

     BEIJING (MNI) - China's foreign exchange reserves fell in September, the

People's Bank of China (PBOC) said Sunday, with the fall coming hard on the

heels of an asset price change driven decline in August.

     - FX reserves fell by $22.7 billion to $3.09 trillion as of Sep. 30,

outpacing a decline of $8.23 billion in August, the lowest overall level of

forex reserves since Jul 2017 when they stood at $3.08 trillion. It was the

biggest decline since Feb, when they decreased $27 billion from the previous

month. 

     - The State Administration of Foreign Exchange, a division of the PBOC,

said the lower valuation of China's FX reserve was due to valuation effects and

lower bond prices across major countries.

     - The forex market remained basically stable for the month with market

behaviour seen as normal, SAFE said, arguing the flexibility of the yuan

exchange rate has improved so far this year. SAFE said the international payment

remained balanced and the scale of forex reserves was stable.

     - The regulator warned the country is facing uncertainties from the

external environment. But the domestic economy is resilient and able to resist

risks, as the strong economic fundamentals help forex stability. "The forex

reserves are expected to remain stable amid volatility," SAFE said. 

     - Since the pressure on the yuan remains strong, particularly following the

PBOC's latest  unexpected reserve requirement ratio cut Sunday, the central bank

could still use reserves to protect the currency if it again falls towards the

key 7 level against the U.S. dollar. USDCNY closed at 6.8725 on Sep. 28, the

last trading day before the week-long National Day holiday. 

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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