BEIJING / SINGAPORE (Reuters) - China's foreign exchange reserves in March rose the fifth consecutive month, the growth exceeded expectations, as growing optimism about the prospects for trade deal between the US and China offset concerns about a slowdown in economic growth.
Chinese reserves, the world's largest, rose by almost $ 9 billion in March to $ 3.099 trillion, the highest rate since August last year, showed the data of the central bank on Sunday.
Economists polled by Reuters The, predicted that the reserves will increase by $ 5 billion to $ 3.095 trillion.
"The US dollar index strengthened slightly in March due to the trade negotiations between China and the United States, revised forecasts of the central bank policy in Europe and America, and also because of the uncertainty regarding Brexit ... China's foreign exchange reserves increased slightly," - said the Chinese regulator.
State Administration of Foreign Currencies (SAFE) added that due to the fact that the economy will maintain a reasonable growth and improved flexibility of the RMB exchange rate will remain stable currency reserves.
Yuan fell by 5.3% against the dollar in the past year, as trade relations with the US deteriorated, and China's economy has slowed. But in 2019 it rebounded by more than 2% in the hope that Washington and Beijing reached an agreement on the termination of their trade war.
In March, the yuan fell 0.3% against the dollar due to the strengthening of the dollar. The dollar rose 1% against a basket of major currencies.
US and Chinese negotiators ended their latest round of trade talks on Friday and were to resume talks this week to try to conclude an agreement that would end the tariff war, which shook world markets.
But the outlook for the dollar is expected to remain soft after the Federal Reserve last month refused to further increase interest rates this year due to signs of economic slowdown in the United States.
Taking into account the continuing weakness of the dollar and the progress in trade negotiations, the yuan is likely to maintain its recent growth and strengthen over the next year, according to analysts in a new Reuters poll. Last time it was trading around $ 6.72.
President Donald Trump said on Thursday that the trade deal could be announced within the next four weeks. But the US trade office said on Saturday that there is still significant work. Discussions are to resume this week.
The cost of foreign exchange reserves of China fell slightly to 78.525 billion dollars to 79.498 billion dollars at the end of February.
a twist of fate?
For most of the past year, global investors worried about the risk of capital outflows from China as an economic slowdown and discussed how long the weak growth in Beijing may continue, although strict controls over capital outflows constrained.
Recently, when the dollar went by the wayside, attention was drawn to the fact, how strong will the pressure from the Chinese politicians, as the inflow of foreign currency in the country's financial markets seem to boost the currency.
Chinese stocks this year, rose more than 20% amid hopes for a bargain, while some Chinese bonds have been added on April 1 to the global Bloomberg Barclays composite index, one of the most frequently monitored standards fixed income.