China's foreign currency reserves have just grown for the first time in six months

 
Jake Cordell
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China has more than $3bn of foreign currency reserves, but these have fallen sharply since 2014
China has more than $3bn of foreign currency reserves, but these have fallen sharply since 2014 (Source: Getty)

China has recorded a surprise jump in its foreign currency reserves in March, potentially ending a slide which has seen its stash of overseas cash fall by 20 per cent since 2014.

Official data - out today - confirmed that China amassed an extra $100bn last month, taking its total reserves to $3.21 trillion (£2.28bn), in the first month increase since last October.

A poll for Reuters showed analysts had forecast reserves to actually fall by $200bn, but dovish comments from Janet Yellen, chair of the Federal Reserve, and expectations that interest rates will go up significantly slower in the US than it was thought just a few months ago have eased pressure on the yuan.

China has been using its foreign currency reserves to buy up its own currency, the renminbi, or yuan, in order to increase demand, and therefore maintain its value.

With the Fed set to raise interest rates only twice this year, the dollar is not likely to strengthen as quickly as was once feared, meaning currency holders are not dumping yuan at the same rate as at the end of 2015 and beginning of 2016.

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