Global Yuan Reserves Climb to Highest Level in Over Four Years

Source: Yicai Global

Yuan reserves of central banks climbed to the highest in over four years during the first quarter, driven by China’s attractiveness to foreign investors.

• International Monetary Fund data released on June 30 showed that yuan reserves rose 6.7% to $287.5 billion from the fourth quarter of 2020 to mark the ninth straight quarter of growth.
• The proportion of the yuan in global foreign exchange reserves jumped to 2.5%, the highest since the last quarter of 2016.
• The currency appreciated by 1.2% against its US counterpart in the first semester.
• Vanguard Asia-Pacific Chief Economist Wang Qian said the growth is driven by the attractiveness of China with reduced risk and higher returns.
• Invesco Managing Director said the growth has been steady in the past years as the yuan was included in the IMF’s reserve asset of Special Drawing Rights.
• Investors are also attracted by an optimistic outlook on Chinese securities which are expected to outpace regional peers.