Chinese Reserves Slide, M2 Coverage Below 14pc

M2 figures come out next week, but unless M2 growth was brought to a standstill in September, reserve coverage of M2 will slide below 14 percent at current exchange rates. Based on credit growth things will only get worse, and as Balding points out in Some Brief Thoughts on Outflows, the dip may only be due to temporary success in the PBoC's game of whack a mole.

SCMP: China’s forex reserves fall more than expected in September, by US$18.8b
China’s foreign exchange reserves have dropped for the third month in a row, with September’s data showing the latest fall has exceeded market expectations as the central bank continues its ongoing efforts to defend the yuan’s exchange rate.

The nation’s forex reserves, the world’s largest, shrank to about US$3.166 trillion last month – down from US$3.185 trillion in August, according to data from the state administration of foreign exchange.

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