I posted on China FX reserves earlier: China FX reserves data (October) was out overnight
The initial data is here: China forex reserves end-Oct USD 3.1092trln vs 3.1085trln prev
This now via Capital Economics, making an interesting point (in brief bolding mine):
- The stability of China's foreign exchange reserves last month masks a pick-up in FX purchases by the PBOC
- Our model suggests that valuation effects should have reduced the reserves by $9bn last month
- This implies that the PBOC bought $10bn of FX in October, up from $0.2bn in September - the first month of net FX purchases in nearly two years.
- we won't know for certain if these estimates of official intervention and capital flows are correct until the People's Bank (PBOC) publishes its balance sheet data later this month
- But if sizeable FX purchases are confirmed this will result in speculation that the PBOC is returning to its long-held policy of resisting renminbi appreciation
- While we suspect that the PBOC is keen to intervene in both directions to create uncertainty over the short-run trajectory of the currency, we don't think it is attempting to resist appreciation over the medium term and don't anticipate a return to large scale FX accumulation
