MNI: Valuation and Slower Cap. Outflow Boost China FX Reserves

--FX Res. Rises For 11th Month

--FX Res. May "Steadily Rise" Given Better Int'l Payment Conditions

     BEIJING (MNI) - Higher valuation of assets and less capital outflow helped

fuel a surge in China's foreign-exchange reserves in December, which was the

11th month that the reserves have increased, according to China's central bank. 

     FX reserves increased by $20.67 billion to $3.14 trillion on Dec. 31, the

highest level since September 2016, according to data released Sunday by the

People's Bank of China (PBOC). The gain doubles the $10.06 billion increase

recorded in November. 

     "Cross-border capital flows and transactions were more stable and balanced

in December," the State Administration of Foreign Exchange (SAFE), a division of

PBOC, said on its website Sunday. Non-dollar currencies appreciated against the

dollar while asset prices in general rose, contributing to a rise in the value

of China's FX reserve in U.S. dollar term, it said.

     The U.S. dollar index, which tracks the greenback against a basket of

currencies, fell to 92.257 on Dec. 29 from 93.014 on Nov. 30.

     The impact from the valuation of China's FX assets contributed to about $12

billion in the value of FX reserves last month, the main reason for FX reserves'

increase, according to estimates by Huatai Securities.

     "That PBOC's purchasing position has grown steadily in recent two months

suggested capital outflow pressure has greatly eased," Huatai Securities said.

     SAFE said the FX reserves may "steadily rise given stable international

payment conditions," characterized by the improving global economy lifting

Chinese exports, China's further opening-up of its domestic financial markets,

and better market sentiment, SAFE said.

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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