China's Forex Reserves Suffer Record $85.7 Billion Monthly Plunge — FX Impact

China's Forex Reserves Suffer Record $85.7 Billion Monthly Plunge

China's foreign exchange reserves fell to $3.4421 trillion as of end-March 2026, down $85.7 billion from February — a 2.5% decline marking the steepest single-month drop in ten years. Analysts attribute the fall to a stronger U.S. dollar index, declining global financial asset prices, and surging oil prices driven by Middle East tensions, all of which weighed on reserve valuations.

FX Impact: The sharp contraction in forex reserves signals capital outflow pressure and dollar strength headwinds, creating near-term downside risk for the RMB. However, officials maintain that the broader economic outlook remains stable, with fundamental support for reserves intact.