Foreign exchange reserves post slight decline in February: SAFE

China’s foreign exchange reserves fell more than expected in February, posting their first decline in 13 months, amid increasing volatility in global financial markets as well as changes in exchange rates and asset prices.

Reserves declined $27 billion, or 0.85 percent, to $3.134 trillion, the State Administration of Foreign Exchange (SAFE) said on Wednesday.

Economists polled by Reuters had expected reserves to drop by $1 billion in February to $3.160 trillion.

The co-effects of international financial market fluctuations, non-US dollar currencies’ depreciation against the dollar and asset price drops led to the decline, the SAFE said.

China’s cross-border capital flows remained steady overall and the foreign exchange market showed a basic balance in supply and demand, according to the bureau’s website.

Capital flight was seen as a major risk for China at the start of 2017, but a combination of tighter capital controls and a faltering US dollar has helped the yuan stage a strong turnaround, bolstering confidence in the economy.

The value of China’s gold reserves fell to $78.064 billion as of the end of February, from $79.675 billion a month earlier, the SAFE said.

It also said that China’s foreign exchange reserve scale is expected to be stable in the future.

It said that two-way fluctuations have become the norm for the yuan’s exchange rate, and that situation helps maintain an overall balance in cross-border capital flows in the medium and long term.

At the same time, with the recovery of the global economy, major central banks are gradually tightening their monetary policies, which will result in uncertainty in global financial markets.