reserves

The Daily Update - When are reserves enough...?

China’s fx reserves fell to, a still very substantial, USD 2.9982tn in January. Although the largest reserves globally, the dip through the psychological USD 3tn threshold has shaken some market players, despite the same commentators saying that the country’s reserves were too large back when they stood at ~USD 4tn! What the reserves are made of only Chinese officials know, however the drop in reserves, albeit attributable to renminbi protection, is also caused by huge currency swings, or fx valuations. Since June last year, sterling alone has fallen 12.6% against the onshore renminbi, and 16.5% against the dollar, at time of writing.

The Daily Update - UK GDP beats, but sterling's losing face

19 years today President Bill Clinton announced: ‘I want to say one thing to the American people; I did not have sexual relations with that woman, Miss Lewinsky’. And, this morning, half of the world woke up to hear that President Donald Trump yesterday signed an order specifying that his much talked about ‘wall’ must be ‘a contiguous, physical wall or other secure, contiguous and impassable physical barrier; let’s hope this figurative and literal act will not be as well reminisced as Clinton’s ‘endeavours’.

Wealthy Nations Daily Update - Opening China's Bond Market - Expect Increasing Foreign Investment Flows

The latest figures on China’s foreign exchange reserves showed a significant deceleration in their decline. Abating from an average outflow of $98bn per month in the prior 3 months, February’s smaller $28.6bn outflow raises questions on whether recent concerns were themselves overheated. One questions whether extrapolating the trend of recent months into multiple years aligns with the underlying causes of such flows and their likelihood of persisting - at such levels and for prolonged periods. Such assumptions are necessary for outflows to sufficiently dent China’s monumental reserves and ability to defend its long term goals. Such assumptions are proving ever more doubtful. This forthcoming month’s results should help evaluate the important factors and help affirm any possible trend changes.

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