The People’s Bank of China revealed its report on the country’s foreign exchange reserves. Forex reserves are decreasing at a record pace. In December, foreign exchange reserves shrank by 107.9 billion to 3.33 trillion dollars at the end of the 2015 year. Though the Chinese foreign exchange reserves are the biggest in the world, experts are worried about such a rapid tumble. The lion’s share of spent funds is allocated to support the national currency. The country’s authorities do their best to prevent devaluation and boost the yuan’s exchange rate.
“China is spending $3.5 billion per day - $2.4 million each second! - to prop up the yuan. How long can that last?” Dennis K. Berman, a Business Editor of The Wall Street Journal, wrote. Indeed, it is hard to keep up with such a pace even for China. In 2015, the Chinese forex reserves lost 512.66 billion dollars showing a record cutback. Foreign currency was used both to stabilize the renminbi and mitigate a slump in stock markets.
However, even these huge financial inflows did not stop the large-scale collapse that took place at the very beginning of this year. The plunge continued and panic among stock market participants triggered a circuit breaker. Besides, the yuan was devalued again in January 2016, and the US dollar surged to the highest mark since August 2015 hitting the level of 6.5646 yuans a dollar. All in all, it seems the country will need great money amounts once again.
