Valuation Effects Lift China's FX Reserves to US$3.4052 Trillion as Gold Holdings Rise for a 24th Month

Valuation effects drove a modest rebound in China's foreign exchange reserves to US$3,405.2 billion in October.

Data released by the State Administration of Foreign Exchange (SAFE) on November 7 showed reserves at US$3,405.2 billion at the end of October, an increase of US$4.9 billion, or 0.14%, from the end of September and the seventh consecutive month above the US$3.4 trillion mark.

Separate central bank data the same day showed gold reserves at 78.30 million ounces at the end of October, up 830,000 ounces month on month — the 24th consecutive month of gold purchases.

SAFE said that in October 2026, reflecting global macroeconomic data and shifts in major economies' monetary policy and expectations, the US dollar index rose while major global financial assets were mixed. The combined effect of currency translation and asset price changes lifted reserves for the month. China's economy is operating steadily and high-quality development has produced new results, supporting the basic stability of the reserve scale, SAFE said.

Guan Tao, chief economist at Huafu Securities, said the increase mainly reflected a positive valuation effect from currency translation and asset price changes against the backdrop of the global macroeconomic environment and major economies' monetary policy.

In October, the dollar index extended its rise but at a slower pace, gaining 0.4% to 101.9, while major global financial assets were mixed. Non-dollar currencies diverged, with the euro and the yen depreciating 1.5% and 0.1% against the dollar respectively and sterling rising 1.0%.

Guan Tao said this implies an overall negative valuation effect from currency translation. On the asset side, the dollar-denominated hedged global bond index reversed course, rising 1.7% after a 1.6% decline the previous month, while the S&P 500 extended its fall, with the drop widening to 0.9% from 0.5%. Asset price changes delivered a positive valuation effect.

In recent years China's reserves have traced a volatile upward path, rising from US$3.1 trillion at the end of October 2023 to US$3.4 trillion.

Wang Qing, chief macro analyst at Oriental Jincheng, attributes this mainly to gains in global financial asset prices over the period, with a weaker dollar index also contributing (106.7 at the end of October 2023 versus 102 at the end of October 2026). Over the same period, the central bank's foreign exchange funds edged down from 21.9 trillion yuan to 21.7 trillion yuan, implying that central bank purchases and sales in the FX market had little impact on the rise in reserves. Since 2024, the domestic macroeconomy has remained stable with progress, and notably sustained rapid export growth has provided important support for the steady increase in reserves.

Looking ahead, Wen Bin, chief economist at China Minsheng Bank, said exports are expected to remain resilient and continue to anchor the balance of payments. On cross-border capital flows, high-level financial opening continues to advance. Overall, China's economy is operating steadily and high-quality development has produced new results, providing support for the basic stability of the reserve scale.