Dubai, UAE — China’s foreign exchange reserves rose to $3.4422 trillion at the end of May, their highest level in several months, as a weaker U.S. dollar and changes in global asset prices boosted the value of the country’s holdings, official data showed on Sunday.
The reserves increased by $31.7 billion, or 0.93%, from April’s $3.4105 trillion, according to data from the State Administration of Foreign Exchange (SAFE). The gain followed a $68.4 billion increase recorded in April, extending a rebound after reserves fell in March.
SAFE said the rise was driven by the combined effects of exchange-rate conversions and changes in global financial asset prices. The regulator added that China’s economy continued to show resilience and steady growth, helping underpin the stability of the country’s external buffers.
Currency Moves Support Valuations
Analysts have long noted that fluctuations in China’s reserves often reflect valuation changes rather than direct intervention in currency markets. A weaker dollar against major currencies tends to increase the dollar value of non-dollar assets held in reserve portfolios.
The Chinese yuan has strengthened this year, gaining more than 3% against the dollar, while authorities have repeatedly pledged to keep the currency “basically stable” despite external uncertainties and trade-related pressures.
Recent reports also indicate that Chinese banks have raised U.S. dollar deposit rates to attract foreign-currency funds and manage capital flows as the yuan appreciates. Foreign-exchange deposits in China’s banking system reached about $1.15 trillion in April, underscoring ample dollar liquidity in the economy.
External Buffers Remain Among World’s Largest
China continues to hold the world’s largest stockpile of foreign exchange reserves, well ahead of other major economies. The reserve holdings are closely watched by investors as a measure of the country’s ability to manage currency volatility, support financial stability and cushion external shocks.
The latest increase comes as major economies navigate shifting monetary policy expectations and geopolitical tensions. While some countries have seen reserves decline due to currency-market interventions, China’s reserves have remained broadly stable above the $3.3 trillion mark for several years.
Economists expect reserve levels to remain supported by China’s trade surplus, steady capital inflows and relatively stable currency conditions, although future movements will depend on global financial markets, U.S. interest-rate trends and investor sentiment toward Chinese assets.
