China’s foreign exchange reserves fell to $3.4 trillion in September, a monthly decline of $38.1 billion, or 1.11%, coming in below market expectations. At the same time, the People’s Bank of China increased its gold holdings for a 23rd consecutive month, with gold reserves rising to 77.47 million ounces at the end of September, extending the longest streak of accumulation on record.
The State Administration of Foreign Exchange released statistics on October 7 showing that as of the end of September, China’s foreign exchange reserves stood at $3.400251 trillion (approximately NT$108.3 trillion), down roughly $38.1 billion (approximately NT$1.2 trillion) from $3.438325 trillion at the end of August, falling short of the market consensus of $3.425 trillion.
The foreign exchange regulator analyzed that in September, influenced by the global macroeconomic environment and monetary policy expectations in major economies, the US Dollar Index advanced while global financial asset prices broadly declined. The combined effect of currency translation adjustments and asset price changes led to the monthly decline in reserve levels.
Gold Reserves Expand for 23 Consecutive Months
On the gold front, the People’s Bank of China held 77.47 million ounces (approximately 2,409.59 metric tons) at the end of September, up 740,000 ounces (approximately 23.02 metric tons) from 76.73 million ounces (approximately 2,386.57 metric tons) at the end of August, a monthly increase of roughly 1%. This marks the 23rd straight month of gold accumulation by China’s central bank, extending a strategy of steadily diversifying foreign exchange asset allocation in recent years.
Central banks worldwide have generally been raising the share of gold in their reserve assets, and China’s pace of accumulation has been particularly steady. Since the start of this buying cycle, China’s gold reserves have increased by a substantial amount, reflecting official demand for safe-haven assets and a longer-term trend toward diversification beyond dollar-denominated holdings.
Official Stance: Reserve Scale Expected to Remain Stable
In its statement, the State Administration of Foreign Exchange emphasized that China’s economy is operating generally smoothly, with new growth drivers emerging and structural improvements underway. High-quality development is yielding fresh results, which supports the fundamental stability of the foreign exchange reserve scale.
From a structural perspective, the September decline in reserves stemmed primarily from two factors: first, a stronger US dollar reduced the book value of non-dollar assets when converted into dollar terms; and second, broadly lower global financial asset prices weighed on the market valuation of reserve assets. Such movements are largely accounting adjustments and do not necessarily reflect actual capital outflow pressures.
Market participants are focused on the trajectory of the US Dollar Index and the monetary policy direction of major economies as key variables that will continue to influence short-term fluctuations in China’s foreign exchange reserves. If the US Federal Reserve maintains a high-interest-rate environment, the dollar could remain firm, exerting pressure on emerging market currencies and the valuation of non-dollar assets.
China’s foreign exchange reserves have largely remained in the $3 trillion to $3.5 trillion range for years after peaking near $4 trillion in 2014. The current level of $3.4 trillion still ranks first globally, providing a substantial buffer for China to weather external shocks.
