Moment of truth for PBoC’s reserve sales

China's FX reserves dropped by $150bn in August, from $3.65trn to $3.5trn, vs a $50bn decline in July. However, the possible range for the decline in reserves could be quite wide, from $100bn-$300bn. 

"Given there was a small positive valuation effect of around $15-20bn from the rally in the EUR and JPY in August, the amount of official reserves sold by the PBoC are estimated to defend the RMB is in the range of $115-320bn", says Societe Generale. 

The current surplus in August at c.$40bn-60bn and so total capital outflows for August could be $255-280bn, up significantly from the $40 per month in H1.