China: Stabilisation of March FX Reserves - Nomura
Research Team at Nomura, notes that China’s headline FX reserves rose by
USD10.3bn m-o-m in March to USD3.213trn compared with our expectation
of a small USD10.0bn decline (we forecast headline reserves at
USD3.192trn).
Key Quotes
“This headline
month-on-month increase is the first since October 2015 and could
initially raise the positivity on China given some signs of
stabilisation in macroeconomic data.
However, adjusting for FX
valuation and coupon payments, FX reserves actually continued to fall,
down USD42bn m-o-m and slightly less than the USD47.9bn decline in
February. The adjustment was mainly accounted for by the rally in
EUR/USD in March. That said, this fall is still much smaller than
expected and also smaller than the USD95.7bn drawdown in January 2016
and the USD141.6bn drawdown in December 2015.
This stabilisation
of FX reserves is consistent with the view that net capital outflow
pressure on RMB could have eased, a position also echoed by the State
Administration of Foreign Exchange (Bloomberg, 16 March 2016) and our
recent analysis.”
(Market News Provided by FXstreet)
