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 showed that, as of the end of March 2026, China’s foreign exchange reserves stood at $33,421 billion, down by $85.7 billion from the end of February, a decline of 2.5%. At present, China’s foreign exchange reserves level remains at a high point over the past 10 years, and has been stable above $3.3 trillion for 8 consecutive months.

With respect to the month-on-month decline in foreign exchange reserves in March, the State Administration of Foreign Exchange analyzed that it was affected by factors including the global macro environment, monetary policies and expectations of major economies; the U.S. dollar index rose and the prices of major global financial assets fell. Driven by the combined impact of factors such as currency translation and changes in asset prices, the foreign exchange reserves for the month declined.

Since March, developments in Iran have triggered dramatic volatility in global assets, with oil prices surging sharply and global asset prices falling broadly. Under the impact of strengthening expectations of Federal Reserve rate hikes and the return of safe-haven funds, in March the U.S. dollar index strengthened and the yield on 10-year U.S. Treasuries rose.

“Higher oil prices have boosted inflation expectations, and the market has even started to bet on additional Federal Reserve rate hikes. Supported by the two factors of keeping interest rates high for longer and the return of safe-haven funds, the U.S. dollar index has continued to strengthen,” Wen Bin, Chief Economist at Minsheng Bank, told Securities Times reporter.

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

From the perspective of asset-price factors, in March the yield on 10-year U.S. Treasuries increased by 33 basis points to 4.3%. Global stock markets saw sharp volatility and overall moved lower, and the prices of various major financial assets generally declined.

Against the backdrop of increasing external risk shocks, in March China’s foreign exchange reserves remained solid at above $3.3 trillion, providing a more secure safety cushion for two-way exchange-rate fluctuations. The State Administration of Foreign Exchange noted that China’s economic operations are generally stable, with progress while maintaining stability. New progress has been made in high-quality development, which provides support for keeping foreign exchange reserves broadly stable.

“With the switch in growth momentum among major economies, the space for the U.S. dollar index to rise on a one-way basis is limited.” Pang Ming, a Senior Research Fellow with the National Institute of Finance and Development, pointed out to reporters. Once the Federal Reserve’s policy shift becomes clear, the currency translation factor will change from “dragging” to “contributing,” helping drive a rebound in the scale of foreign exchange reserves.

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 underpinning of the balance of international payments: against the backdrop of oil-price shocks affecting the global production and supply chain, China’s advantages in new-energy manufacturing and its advantages across the entire industrial chain will become even more prominent. In terms of cross-border capital flows, as China’s level of facilitation for cross-border investment and financing continues to improve, foreign direct investment will remain stable. Meanwhile, the valuation advantages and allocation value of renminbi-denominated assets will be increasingly apparent, and portfolio investment is expected to continue to see inflows on 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 by 160,000 ounces from the end of the previous month. This is the first time since March 2025 that China’s central bank has increased its monthly gold holdings by more than 100,000 ounces. At present, the central bank has been adding to gold for 17 consecutive months.

Gold is an important component of the diversified composition of countries’ international reserves, with advantages such as hedging risk, resisting inflation, and preserving and increasing value over the long term. Since March, the gold price has seen sharp adjustments. Regarding the reasons for the large decline during the month, Luo Zhiheng, Chief Economist and President of the research institute at Yuekai Securities, said in a research report that the main factors include: geopolitical developments pushing inflation expectations higher and expectations of monetary tightening; funds taking profits after being positioned at high levels; and liquidity panic triggered by volatility in the stock market, which has brought downward 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 price center of gravity.” 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, and there is still considerable room for reserve growth.