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BEIJING Feb 7 China's foreign exchange reserves
unexpectedly fell below the closely watched $3 trillion level in
January for the first time in nearly six years, even as
authorities tried to curb outflows by tightening capital
Reserves fell by $12.3 billion in January to $2.998
trillion, compared with a drop of $41 billion drop in December.
Economists polled by Reuters had forecast forex reserves
would fall by about $10.5 billion to $3 trillion.
While the $3 trillion mark is not seen as a firm "line in
the sand" for Beijing, concerns are swirling in global financial
markets over the speed at which the country is depleting its
ammunition to defend the currency and staunch capital outflows.
Some analysts fear a heavy and sustained drain on reserves
could prompt Beijing to devalue the currency.
The yuan fell 6.6 percent against the rising
dollar in 2016, its biggest annual drop since 1994.
For 2016 as a whole, China burned through nearly $320
billion of reserves, on top of a record drop of $513 billion in
The yuan has found some respite in recent weeks as the
dollar retreated, helped also by recent steps to curb capital
But analysts expect downward pressure on the yuan to resume,
especially if the U.S. continues to raise interest rates, which
would likely trigger fresh capital outflows from emerging
economies such as China and test its enhanced capital controls.
China's gold reserves rose to $71.292 billion at the end of
January, from $67.878 billion at end-December, data published on
the People's Bank of China website showed.
(Reporting by Beijing Monitoring Desk and Kevin Yao; Editing by