2020-07-10

China Forex Reserves Heading for 10pc of M2

It doesn't matter until it does. China's forex reserves covered 10.3 percent of M2 as of June 30. The rally in the yuan since then has reduced coverage to 10.2 percent.

M2 grew at 11.1 percent yoy in June, the same as the prior month. Month-on-month growth in M2 was 1.65 percent, which was similar to the 1.60 percent in June 2019. If the PBoC wants to hold M2 near 11.0 percent yoy growth, the next three months combined will see about as much credit creation as June alone.

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