China’s foreign currency holding dropped slightly by USD 8.2B to USD 3.110T in August, down from USD 3.118T. But that’s still lower than market expectation of USD 3.115T. Nonetheless the data showed that China’s capital control measures worked reasonable well so far and thus, there was no imminent need to large scale direct intervention.
Back in August, China restarted a reserve requirement on foreign exchange forward trading. Also, a counter-cyclical factor in daily pricing of Yuan was reinstated.
USD/CNH (off-shore Yuan) surged sharply since March low at 6.2359 to as high as 6.9586 as trade tension with US escalated.