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1st LD Writethru: China forex reserves fall for 4th straight month

Xinhua, November 7, 2016 Adjust font size:

China's foreign exchange reserves shrank for a fourth straight month in October, the central bank said Monday.

The world's largest currency hoard fell to 3.12 trillion U.S. dollars last month, down 45.7 billion dollars from September, marking the lowest level since March 2011, according to data from the People's Bank of China.

The result comes as China sold dollars to defend the yuan against depreciation caused by capital outflows.

However, the fall was milder than expected, which showed that the central bank didn't use too many reserves to bolster the yuan, said Larry Hu, head of China Economics at Macquaire Securities.

It shows that the central bank is more tolerant of the yuan's fluctuations than people think, Hu said.

The yuan has depreciated over 4 percent against the U.S. dollar since the start of the year, due to growing expectations of an interest rate hike by the U.S. central bank.

However, experts believe that the sharp and persistent depreciation of the yuan is unwarranted, because it is not supported by underlying fundamentals.

Despite the difficulties in transitioning successfully to a consumption and innovation-driven economy, China's GDP grew 6.7 percent in the third quarter, holding steady with the second quarter and outpacing many major economies.

China's gold reserves rose to 59.24 million ounces in October, equivalent to 75.35 billion dollars, according to PBOC's data. Endi