FxWirePro: China’s FX reserves rise for fifth consecutive month

China’s FX reserves, decline of which raised major concerns last year and triggered selloffs in the Chinese currency Yuan, is now up for a fifth consecutive month this year and has hit the highest level since October last year. Data from the People’s Bank of China (PBoC) show reserves crept up to $3.056 trillion last month, up $3.22 billion in the month, but it was just below an average forecast of £3.061 trillion compiled by Bloomberg.

Since the summer of 2014, the Chinese FX reserves have been declining and the decline intensified after People’s Bank of China intervened in the market in August 2015 to depreciate the Renminbi by 1.9 percent and again intervened at the beginning of 2016. The country has also suffered a steady depreciation in the Yuan exchange rate and regular financial outflows. June’s figures suggest financial outflows slowed last month, while Yuan has reversed its depreciating course in recent months.

We at FxWirePro, have also changed our bearish outlook in the Yuan in recent months and forecasted a steady rise in the exchange rate against the dollar.

Active call from FxWirePro: Sell USD/CNH at 6.87 (then current rate) with a target of 6.78 (reached), that was extended to 6.69. We have also recommended re-entry at 6.81 per dollar.