China forex reserves in record fall as Beijing tries to calm markets
(Worthy News) – China’s foreign exchange reserves posted their biggest monthly fall on record in August, reflecting Beijing’s attempts to halt a slide in the yuan and stabilize financial markets following its surprise move to devalue the currency last month.
China’s reserves, the world’s largest, fell by $93.9 billion last month to $3.557 trillion, central bank data showed on Monday.
The drop left market watchers questioning how sustainable China’s efforts to support the yuan are, as capital flows out of the country due to fears of an economic slowdown and prospects of rising U.S. interest rates. [ Source ]
China has spent $236 billion on its stock market bailout
The Chinese government has spent 1.5 trillion yuan ($236 billion) trying to prop up the country’s plunging stock market, according to analysis by Goldman Sachs.
Bailout costs in August alone were 600 billion yuan ($94 billion). Since the middle of June, the Wall Street bank estimates Beijing’s spending equals 3.5% of the value of all stocks in the country.
The numbers underscore the high cost of Beijing’s efforts to prop up stocks — a response that has been panned by some critics as unnecessary and counterproductive.
The first signs of trouble came in June, after the Shanghai Composite peaked at more than 5,100 points, a gain of roughly 150% over the previous 12 months. When the bubble burst, the index lost 32% of its value in just 18 trading sessions. [ Source ]
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