Why China’s reserves plummeted $87.2 bln in November – BBH

By FXStreet FXStreet (Delhi) – Research Team at BBH, notes that China’s reserves fell by a little more than $87 bln in November, marking its third largest decline it has recorded, and a little below the $94 bln drop reported in August.

Key Quotes

“The euro fell 4% in November. Although China has begun to adopt the IMF’s best practice about reporting its reserve holdings, it is not yet fully transparent. Assuming that China’s euro holdings matched the global share of allocated reserves (20.5% at the end of Q2), the depreciation of the euro alone accounted for an almost $29 bln decline in the value of China’s reserves. The change in the euro’s value accounts for a third of the decline in China’s reserve holding.

In November, nearly all the reserve currencies depreciated against the dollar. The Swiss franc also fell 4%. Sterling lost 2.4%. The Canadian dollar slipped 2.1%, and the yen eased 2%. All told, it seems reasonable to assume that nearly half of the decline in China’s reserves may be traced to the vagaries of the foreign exchange market.

That leads us to the second main consideration. Capital outflows. …read more

Source:: FX Street