China's forex reserves continue to fall

A photo illustration shows a $100 banknote placed above Chinese 100 yuan banknotes in Beijing in this May 10, 2013 file photo. [Photo/Agencies]

BEIJING - China's foreign exchange reserves fell to $3.56 trillion at the end of August, the country's central bank announced on Monday.

The reserves decreased by $93.9 billion in August, marking the fourth consecutive month of falling forex reserves, according to the People's Bank of China.

But the country's gold reserves climbed from $59.238 billion at the end of July to $61.795 billion at the end of August.

China's forex reserves fell by $40 billion in the second quarter, marking a seven-quarter low and a fourth consecutive quarterly drop.

Fuelled by exports, forex reserves had grown for more than a decade before beginning their decline in the third quarter of 2014.

Guan Tao, former head of the international payments department at the State Administration of Foreign Exchange, said one reason for the fall in forex reserves is the rising US dollar, which cut the value of non-dollar assets in the reserves.

Another reason is that individuals and enterprises have been increasing their forex deposits and assets, Guan said.

More individuals and enterprises are willing to hold US dollars, resulting in dropping forex reserves, said Xie Yaxuan, chief analyst with China Merchants Securities.

If the United States hikes interest rate as expected in September, China's forex reserves may continue to fall, Xie said.