Key Points

• The foreign currency stockpile climbed $23.9 billion to $3.081 trillion in July, the People’s Bank of China said Monday
• Level compares with a $3.075 trillion estimate in a Bloomberg survey

Big Picture

Solid economic data and the presence of curbs on moving money abroad have helped restore confidence in the currency and ease outflow pressure. The foundation for steadier cross-border capital flows has become more solid, the State Administration of Foreign Exchange said last month. A weaker dollar has also lifted the value of assets in yen and euros.

Economist Takeaways

"Depreciation expectations in the market have definitely abated, and outflow pressure has eased," said Zhu Qibing, chief macro-economy analyst at BOC International China Ltd. in Beijing. He expects reserves to hover around the current level for the rest of the year.

"This is enough to change market expectations from yuan depreciation to appreciation," said Iris Pang, an analyst at ING Groep NV in Hong Kong. "The pressure on capital outflows has eased a lot, but I don’t think regulators will relax curbs."

"Today’s data on FX reserves perfectly fits to the latest change of mood regarding the Chinese currency," Frederik Kunze, chief China economist at German lender NordLB in Hanover, said in an email. "Fears with respect to a pronounced depreciation of the RMB against the USD have receded substantially. Attention will likely start to focus on more liberalization measures."

The Details

• Reserves fell 3.8 percent from a year earlier
• The onshore yuan strengthened 0.8 percent to 6.7290 per dollar last month