China boosts gold holdings, foreign exchange reserves in December

China’s foreign exchange reserves rose 2.1 percent month-over-month to $3.238 trillion in December, a two-year high, according to data released Sunday by China’s State Administration of Foreign Exchange (SAFE).

The figure was above the $3.2 trillion expectation of a Reuters poll of analysts, and was also above the $3.172 trillion print for November.

SAFE said in a statement that their reserves were boosted by a decline in the U.S. dollar index and broad-based increases in global financial asset prices in December, which in turn were impacted by the monetary policies and expectations of major economies.

The yuan rose 0.52 percent against the greenback in December, while the U.S. dollar index fell 2 percent.

China also increased its gold reserves for a 14th consecutive month in December.

SAFE said that China held 71.87 million troy ounces of gold at the end of last month, up from 71.58 million ounces at the end of November. The value of its gold reserves also rose to $148.23 billion at the end of December from the $145.7 billion registered at the end of the prior month.

On Dec. 29, China’s foreign exchange trade platform announced that they would adjust the weightings of two key yuan index baskets in 2024 to better reflect trade patterns.

As of Jan. 1, the China Foreign Exchange Trade System (CFETS), which is overseen by the central bank, has lowered the U.S. dollar’s weighting in the CFETS currency basket to 19.46% from 19.83%, and has also cut the euro’s weighting to 18.08% from 18.21%.

The adjustments will “further enhance the representativeness of the yuan currency basket index,” CFETS said in an online statement.

China also lowered the weightings for the dollar and euro in the CFETS basket in 2023.

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