November 7, 2018 / 9:00 AM / 9 days ago

China's Oct FX reserves fall to $3.053 trln, 1-1/2 year low

BEIJING, Nov 7 (Reuters) - China’s foreign exchange reserves fell more than expected in October amid mounting U.S. trade pressure, suggesting authorities may be stepping up intervention to prevent the yuan from breaking through the key support level of 7 per dollar.

Reserves fell by $33.93 billion in October to $3.053 trillion, central bank data showed on Wednesday. The drop was the biggest monthly decline since December 2016 and compared with a fall of $22.69 billion in September.

Economists polled by Reuters had expected reserves to drop $27 billion to $3.06 trillion.

The yuan slipped closer to the psychologically important level of 7 per dollar in late October, though it has clawed back some losses on hopes that Sino-U.S. trade tensions may ease.

Policy sources have told Reuters that China is likely to use its vast currency reserves to stop any precipitous fall through the 7 level as it could risk triggering heavy capital outflows, adding to pressure on the country’s financial markets and its slowing economy.

The value of China’s gold reserves rose to $71.968 billion at the end of October, from $70.327 billion at the end of September.

Reporting by Beijing Monitoring Desk; Editing by Kim Coghill

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