China’s forex reserves fall by $93.9 billion as PBOC intervenes on yuan

China’s foreign-exchange reserves fell to $3.56 trillion at the end of August, as the nation’s central bank intervened in the currency market to shore up the yuan and prevent capital flowing out of the world’s second largest economy.

FX reserves were down by $93.9 billion in August from the holdings in July and it has been dropping for four consecutive months, according to data released on Monday by the People’s Bank of China.

Capital outflow is a big concern,” said an official close to the central bank. That’s despite Beijing still having a big war chest of reserves to defend the yuan USDCNY, -0.0251% At stake is China’s glut of savings — deposits currently stand at $21 trillion, or almost twice the economy — which could stream out of the country if the yuan continues to weaken and authorities loosen their grip over cross-border capital flows.

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