China’s currency the yuan managed to reach its sharpest decline in the last twenty years, as China’s foreign currency stayed above $3 trillion for December. The People’s Bank of China confirmed that reserves dropped $41 trillion to $3 trillion.
The State Administration of Foreign Exchange (SAFE) says the attempt to stabilize the yuan contributed to the fall in foreign currency. The bank provided the funds to help maintain the foreign exchange balance. This also caused the drop in exchange reserves.
To keep investor confidence and prevent further drops in the yuan, China will attempt to keep the currency above $3 trillion. Policy makers began extra requirements for citizens exchanging yuan to foreign currency. This began the start of the new year. It is possible that policy makers favor using capital control as opposed to flying through foreign currency to protect the yuan.
China’s gold reserves also fell close to the end of December. The numbers stood at $67.9 billion lower than the $69.8 billion it stood at the year before. The yuan also dropped last month by 0.9 percent, totaling 6.5 percent decline for the whole year.
