China's foreign exchange reserves plunged by $69 billion in November to a five-year low, according to central bank data released Wednesday, as policy-makers battled to support the yuan currency against a resurgent dollar. The world's largest hard-currency stockpile dropped to $3.05 trillion, its fifth-straight monthly contraction and the largest month-on-month decline since January, the People's Bank of China (PBOC) said.
Stubborn capital outflows and official attempts to shore up the yuan by selling foreign exchange were the likely main causes, Capital Economics said in a research note, adding the fall was slightly larger than expected. The yuan has slid against the dollar, plumbing eight-year lows in recent weeks. The dollar has been lifted by growing expectations of a Federal Reserve interest rate hike by year's end, which could encourage a tide of capital flowing toward US assets.
For China's government, the capital-flight fears have been compounded by a record-setting spree of overseas investment by Chinese companies. Chinese authorities have sought to stem the outflows by placing new restrictions on overseas investment.
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