BEIJING (Reuters) - Falls in China’s foreign exchange reserves are normal and not unfavorable, the country’s central bank governor said on Friday.
China’s foreign currency reserves, the world’s largest, had declined for seven straight months through January, before a small increase in February, as the central bank intervened to support a weakening yuan. The country will not overreact to a decline in the forex reserves, said People’s Bank of China head Zhou Xiaochuan on the sidelines of the annual parliament session in Beijing.
Zhou also said cross-border capital flows will be generally balanced in the future, adding that it is necessary to have policy guidance on outbound investment.
China has faced persistent capital outflows as expectations remain for the yuan to weaken, leading companies and individuals to move money out of the country.
A fixed exchange rate is not favorable for structural adjustment, Zhou said on Friday.
Reporting by Kevin Yao and Yawen Chen; Editing by Richard Borsuk