China’s forex reserves in May up by a less-than-expected $3.6 billion

China’s foreign exchange reserves rose by a less-than-expected $3.6 billion in May, official data showed on Saturday, as the dollar continued to weaken against other major currencies.

The country’s foreign exchange reserves, the world’s largest, rose 0.11 per cent to $3.285 trillion last month, below the Reuters forecast of $3.292 trillion. They were $3.282 trillion in April.

The increase in reserves was due to “the combined effects of factors such as exchange rate conversion and asset price changes,” China’s State Administration of Foreign Exchange said in a statement.

The yuan weakened 1.05 per cent against the dollar in May, while the dollar slid 0.23 per cent against a basket of other major currencies. China’s foreign exchange reserves rose by a less-than-expected $3 billion in May, official data showed on Saturday, as the dollar continued to weaken against other major currencies.

The country’s foreign exchange reserves, the world’s largest, rose to $3.285 trillion last month, below the Reuters forecast of $3.292 trillion. They were $3.282 trillion in April.

The yuan weakened 1.05 per cent against the dollar in May, while the dollar slid 0.23 per cent against a basket of other major currencies.

Meanwhile China’s central bank added gold to its reserves in May for the seventh straight month, official data from the People’s Bank of China (PBOC) showed on Saturday.

Spot prices for gold, often seen as a refuge from economic and geopolitical uncertainty, were steady in May after hitting an all-time high of $3,500 per ounce in April.

China’s gold reserves rose to 73.83 million fine troy ounces at the end of May from 73.77 million ounces at the end of April.

Its gold reserves were valued at $241.99 billion at the end of last month, down from $243.59 billion at the end of April, the PBOC said.

With bullion up 27% so far this year due to tariff war fears on top of 27% growth in 2024, gold market specialists say the PBOC’s readiness to continue building up gold holdings despite high prices reflects Beijing’s desire to diversify its foreign currency reserves.

Officials at the PBOC have not publicly said what was driving the gold purchases. In 2024, the PBOC took a six-month pause after an 18-month-long gold purchasing spree, before resuming buying gold in November, when Donald Trump won the US presidential election.

The world’s central banks are on track to buy 1,000 metric tonnes of gold in 2025, which would be their fourth year of massive purchases as they diversify reserves from dollar-denominated assets into bullion, consultancy Metals Focus said this week.

Meanwhile China is willing to accelerate the examination and approval of rare earth exports to European Union firms and will also deliver a verdict on its trade investigation of EU brandy imports by July 5, its commerce ministry said on Saturday.

Price commitment consultations between China and the EU on Chinese-made electric vehicles exported to the EU have also entered a final stage but efforts from both sides are still needed, according to a statement on the Chinese commerce ministry’s website.

The issues were discussed between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic in Paris on Tuesday, according to the statement.

The comments mark progress on matters that have vexed China’s relationship with the European Union over the past year.

Most recently, China’s decision in April to suspend exports of a wide range of rare earths and related magnets has upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.

The ministry said China attached great importance to the EU’s concerns and “was willing to establish a green channel for qualified applications to speed up the approval process.”

Commerce Minister Wang during the meeting “expressed the hope that the EU will meet us halfway and take effective measures to facilitate, safeguard and promote compliant trade in high-tech products to China,” according to the statement.

Chinese anti-dumping measures that applied duties of up to 39 per cent on imports of European brandy - with French cognac bearing the brunt - have also strained relations between Paris and Beijing.

The brandy duties were enforced days after the European Union took action against Chinese-made electric vehicle imports to shield its local industry, prompting France’s President Emmanuel Macron to accuse Beijing of “pure retaliation”.

The Chinese duties have dented sales of brands including LVMH’s Hennessy, Pernod Ricard’s Martell and Remy Cointreau. Beijing was initially meant to make a final decision on the brandy duties by January, but extended the deadline to April and then again to July 5.

Reuters