China’s foreign exchange reserves unexpectedly dropped in January, likely due to valuation effects as the US dollar gained. 

According to Reuters, the country’s forex reserves fell to US$3.22 trillion last month, down from $3.25 trillion in December. 

Meanwhile, the dollar posted a rise of 1.03% against other key currencies, with the yuan losing 0.9% against the dollar. 

China at least retained its 62.64 million fine troy ounces of gold at the end of January from the end of December.

At the end of January, China’s gold reserves had dropped from $113.13 billion to $112.46 billion.

The People’s Bank of China, or its central bank, holds the country’s foreign exchange reserves and announces the total amount of reserves regularly. The reserves stood at $3,408 billion in August 2021, making the country with the highest foreign exchange reserves.

Assets in the reserves include cash, bonds, deposits, and financial assets denominated in foreign currencies. 

As contrasted to the U.S, the composition of foreign exchange reserves is classified information in China. But in 2019, China’s State Administration of Foreign Exchange stated that U.S dollar-denominated assets accounted for 58% of China’s total reserves at the end of 2014. Analysts believe that China also holds strong currencies such as British pounds, Euros, and Japanese yen.

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