China’s FX reserves likely unchanged at February end

China's FX reserves are expected to have remained greatly unchanged at $3,230bn at the end of February 2016. The yen's and euro's appreciation against the US dollar has added more than $10 billion to the valuation of reserves. It has also markedly reduced the depreciation pressure on the RMB by making it possible for the currency to remain greatly stable against the basket of currencies without declining too much against the dollar.

The USD/RMB stability and stricter capital controls in certain areas likely assisted in curbing capital outflows. Moreover, China's central bank policymakers have properly communicated their intentions to the market.