Foreign exchange reserves stabilize at $3.3 trillion in March; the central bank has increased gold holdings for 17 consecutive months.

Securities Times reporter He Jueyuan

On April 7, the latest statistics released by the State Administration of Foreign Exchange (SAFE) showed that as of the end of March 2026, China’s foreign exchange reserves stood at $33,421 billion, down $85.7 billion from the end of February, a decline of 2.5%. At present, China’s foreign exchange reserve level remains at a high level over the past 10 years, having stayed stable above $3.3 trillion for 8 consecutive months.

Regarding the month-on-month decline in the foreign exchange reserve scale in March, SAFE said it was affected by factors such as the global macro environment, the monetary policies of major economies, and expectations. The U.S. dollar index rose, while prices of global major financial assets fell. A combined impact from factors including currency conversion and changes in asset prices led to the decline in the foreign exchange reserves during the month.

Since March, the situation in Iran has triggered sharp volatility in global assets, with oil prices surging, and global asset prices falling across the board. Under the influence of intensifying expectations of Federal Reserve rate hikes and the return of safe-haven funds, the U.S. dollar index strengthened in March and yields on 10-year U.S. Treasuries rose.

“Rising oil prices have boosted inflation expectations, and the market has even started to bet on more Federal Reserve rate hikes. Supported by the dual factors of keeping high interest rates for longer and the return of safe-haven funds, the U.S. dollar index has continued its strengthening trend.” Wen Bin, chief economist of Minsheng Bank, told Securities Times reporter He Jueyuan.

From the perspective of exchange-rate factors, in March the U.S. dollar index rose 2.4% month-on-month. During the month, it once broke above the 100 mark. Non-U.S. dollar currencies overall weakened, thereby lowering the size of foreign exchange reserves denominated in U.S. dollars.

From the perspective of asset-price factors, in March yields on 10-year U.S. Treasuries rose by 33 basis points to 4.3%. Global stock markets saw intense volatility and an overall downward trend, and prices of various major financial assets generally fell.

Against the backdrop of increased external risk shocks, in March China’s foreign exchange reserve scale remained solid above $3.3 trillion, providing a more solid safety cushion for two-way fluctuations in the exchange rate. SAFE noted that China’s economic performance has been generally stable, making progress while maintaining stability. New achievements in high-quality development provide support for keeping the foreign exchange reserve scale basically stable.

“With the shift in growth momentum among major economies, there is limited room for the U.S. dollar index to rise in one direction.” Pan Ming, a specially appointed senior research fellow at the National Financial and Development Laboratory, pointed out to reporters that once the Federal Reserve’s policy shift becomes clear, the currency conversion factor will change from a “drag” to a “contribution,” driving a rebound in the foreign exchange reserve scale.

China’s foreign exchange reserves mainly come from trade surpluses, foreign direct investment, and capital flows. Looking ahead to the next stage, Wen Bin believes that exports will continue to play the role of the basic pillar in the balance of international payments: against the backdrop of oil-price shocks affecting global production and supply chains, China’s advantages in new-energy manufacturing and across the entire industrial chain will become even more prominent. For cross-border capital flows, as China’s facilitation level for cross-border investment and financing continues to improve, foreign direct investment will remain stable. At the same time, the valuation advantages and allocation value of renminbi-denominated assets will stand out, and portfolio investment is expected to continue to see inflows of a reasonable scale.

The official reserve asset data updated that day also showed that as of the end of March 2026, China’s official gold reserves were 74.38 million ounces, up 160,000 ounces from the end of the previous month. This is the first time since March 2025 that the People’s Bank of China has increased its monthly holdings by more than 100,000 ounces. At present, the central bank has increased its gold holdings for 17 consecutive months.

Gold is an important component of the diversified composition of international reserves and has advantages such as hedging against risks, resisting inflation, and preserving and increasing value over the long term. Since March, the gold price has undergone sharp adjustments. Regarding the reasons for the substantial drop in the month, Luo Zhiheng, chief economist of Yuekai Securities and president of its research institute, pointed out in a research report that the main factors include: geopolitical developments pushing inflation upward and intensifying expectations of monetary tightening; funds taking profits after running at a high level; and liquidity panic triggered by volatility in the stock market, which brings passive selling pressure on gold.

“Non-U.S. central banks’ willingness to buy gold remains strong, and it is expected to continue to push up the gold price’s central level.” Luo Zhiheng said that increasing gold holdings has become an important choice for non-U.S. central banks to enhance financial security. Central banks in emerging markets are especially active, with still substantial room for reserve growth.

(Editor: Wen Jing)

Keywords:

                                                            Foreign exchange
                                                            Gold