China's actual foreign exchange reserves still subject to debate

Confusion over how China tallies its foreign exchange reserves has raised further concerns as the People’s Bank of China continues to prop up the yuan after changing its currency fixing regime, The Financial Times reported. Forex reserves now stand at US$3.5 trillion, but it is unclear how offshore intervention and sovereign wealth fund investments factor into that figure. “The PBoC’s war chest is sizeable, no doubt, but not unlimited,” Wei Yao, China economist at Société Générale, recently wrote. “It is not a good idea to keep at this battle of currency stabilisation for too long. We think that $1tn is the absolute maximum the PBoC can sell.”