After months of continuous growth, China's foreign exchange reserves have once again risen for the fifth straight month. According to the country's central bank, China's foreign exchange reserves have now reached US$3.099 trillion.
The world's largest reserve of money and other assets held by a central bank had risen by around US$9 billion in March. The increase was the highest ever recorded by the central bank since August of last year.
The increase was significantly higher than initial estimates, which was around US$5 billion for March. China's foreign exchange regulator mentioned after the announcement that the marginal increase in the country's reserves was partly due to the ongoing optimist surrounding the outcome of the ongoing US-China trade negotiations.
The strengthening of the US dollar index and the revised policies of European central banks have also played a major part in the continued growth.
China's currency had fallen by as much as 5.3 percent against the US dollar at the start of the negotiations with the United States last year. As tensions grew, China's economy had experienced a slower-than-normal rate of growth.
This year, as the negotiations continue, the economy has rebounded with a 2 percent increase so far in the first quarter of 2019. However, the country's gold reserves slightly fell in February, dropping to US$78.525 billion to US$79.498.
The US dollar gained a marginal increase last month, resulting in a 0.3 percent fall of the Chinese yuan against the US currency. The US dollar also gained a 1 percent increase against other major currencies during the same month.
However, there are some concerns that the US dollar may not remain at the same levels following the US Federal Reserves' unwillingness to increase interest rates due to fears of a possible economic recession.
Meanwhile, the Chinese yuan is expected to hold on to its current levels if the US dollar will weaken, with the number possibly even gaining if the trade talks progress as expected. The optimism over an amicable resolution in the ongoing US-China trade negotiations is expected to positively affect global markets in the coming months.
US President Donald Trump previously mentioned that the trade deals were going well and that a resolution may even be reached within the next four weeks. Pressure has also been placed on China's lawmakers to ease restriction of the flow of foreign investments into the country. The influx of new capital from foreign investors into China's financial markets is expected to further boost the Chinese yuan in the coming months.
