MNI 5 THINGS: China FX Reserves Fall $8.23 Billion In August

     BEIJING (MNI) - China's foreign exchange reserves fell in August, coming

after June and July saw two consecutive months of increasing reserves on asset

price changes, according to a statement by the People's Bank of China (PBOC)

Friday.

     -FX reserves fell by $8.23 billion to $3.11 trillion as of Aug. 31,

compared with an increase of $5.82 billion in July. The State Administration of

Foreign Exchange, a division of the PBOC, said the lower valuation of China's FX

reserve was due to volatility of the dollar index and uncertainty caused by

global trade conflicts and geopolitics. 

     -Forex market supply and demand was 'stable' in August and cross-border

capital flows remained balanced, SAFE said. "Forex reserves remain stable,

benefiting from good economic momentum, stable forex market and improved

flexibility of the yuan exchange rate," the regulator said.

     -SAFE said that the forex reserves are expected to remain stable, despite

some volatility as strong economic fundamentals compete with geopolitics and

rising uncertainty in financial market.

     -As the yuan fell sharply against the greenback, close to the important

level of 7, the PBOC has reintroduced tools it can use to smooth the market,

including restarting the counter-cyclical factor into its fixing price formula

on Aug 24. Sources familiar with the PBOC's operations told MNI that it is not

impossible for the central bank to sell forex reserves to prop up the currency

if depreciation continues at a sharp pace. (MNI Insight: PBOC Yuan Support May

Fade If U.S. Plays Tough)

     -President Xi Jinping announced this week that China will offer a further

$60 billion in financing for Africa. According to People's Daily, the sum will

come from the country's forex reserves, which means the pile may be somewhat

further reduced.

--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

[TOPICS: MAQDS$,M$A$$$,M$Q$$$]