China's forex reserves drops to lowest since 2011

Beijing: China's prized foreign exchange reserves, the highest in the world, shrank for a fourth straight month in October in the face of increased outbound investments by Beijing and steady capital outflows following steady depreciation of Chinese currency yuan.

The world's largest currency hoard fell to USD 3.12 trillion last month, down USD 45.7 billion from September, marking the lowest level since March 2011, according to data from the People's Bank of China.

The result comes as China sold dollars to defend the yuan against depreciation caused by capital outflows, state-run Xinhua news agency reported today.

The yuan has depreciated over four percent against the US dollar since the start of the year, due to growing expectations of an interest rate hike by the US central bank.

However, experts believe that the sharp and persistent depreciation of the yuan is unwarranted, because it is not supported by underlying fundamentals, the report said.

Besides pressures faced by Yuan against dollar, China is also stepping up its overseas direct investment (ODI) USD 102.75 billion in the first seven months, overtaking the Foreign Direct Investment (FDI) of USD 77.13 billion as per the official data released last month.

China's gold reserves rose to 59.24 million ounces in October, equivalent to USD 75.35 billion, according to PBOC's data.