Forex reserves rise for third straight month to $3.03t

An employee at a currency exchange store counts Chinese one-hundred yuan and US one-hundred dollar banknotes in Hong Kong, China, on Wednesday, Aug 12, 2015. [Photo/VCG]

Foreign exchange reserves rose $20.4 billion to $3.03 trillion in April, compared with an increase of $3.96 billion to $3.01 trillion in the previous month, according to data from the People's Bank of China.

The reserves continued to rise for three straight months after they dropped below the $3 trillion benchmark in January, the first time since February 2011.

The State Administration of Foreign Exchange said in a statement that the reserves rose due to more balanced cross-border capital flows and the appreciation of many other currencies against the dollar in the international market.

The dollar index, which tracks the greenback against a basket of six major rivals, has been fluctuating at low levels since April, Liu Jian, senior researcher of Bank of Communications, told the National Business Daily.

The dollar index dipped by about 1.5 percent in April, declining for the second straight month. From April 10 to May 5, the index fell to 98.58 from 101.19.

Independent economist Xu Yang said a weaker dollar has released some pressure on yuan depreciation.

The yuan's performance against the dollar has been steady in recent weeks after the dollar lost its upward momentum. The central parity rate of the yuan weakened 63 basis points to 6.8947 against the US dollar Monday, according to the China Foreign Exchange Trade System.

However, after the dollar index fell below 99, there is limited room for further decline in short term. Plus, the market has high expectations that the Federal Reserve would likely lift US interest rate in June, which may drive up the dollar index.

Besides the decline of the dollar index, China's forex reserves rise was also attributable to recent stable economic data, slow capital outflow and less pressure on yuan depreciation, Liu added.

The reserves are expected to be at stable level in short term, Liu predicted.