China's September Forex Reserves Dip to $3.4 Trillion; PBOC Extends Gold-Buying Spree to 23 Months
On.cc · 4 SOURCES1 day ago2 MIN
Summary
China's foreign exchange reserves slipped to $3.40 trillion in September 2026, marking a decline of $381 billion from the previous month, as U.S. Treasury yields climbed and dented bond valuations across major Asian central banks. The People's Bank of China extended its gold-buying campaign to 23 consecutive months, pushing reserves to 77.47 million ounces, while gold exchange-traded funds recorded their strongest quarterly inflows on record at $310 billion. Regional competitors Singapore saw its reserves hit a four-year high, contrasting with declines in Japan and Hong Kong.
Key Points
- China's forex reserves stood at $34,002.51 billion as of end-September 2026, falling $381 billion or 1.11% from August's $34,383.25 billion, the lowest level since Q2
- The People's Bank of China increased gold holdings to 77.47 million ounces from 77.33 million ounces in August, adding 740,000 ounces for the 23rd straight month of acquisitions
- Japan's forex reserves extended their decline to five consecutive months, dropping to $11,783.96 billion as U.S. long-term interest rates eroded the market value of its Treasury holdings
- Hong Kong's Monetary Authority reported reserves of $433 billion at end-September, down $98 billion month-on-month for the second consecutive decline
- Global central banks purchased 170 tonnes of gold in the first eight months of 2026, with the World Gold Council noting that geopolitical uncertainty continues driving reserves diversification
Why It Matters
The synchronized decline in foreign exchange reserves across China, Japan, and Hong Kong underscores how rising U.S. interest rates are reshaping Asia's financial buffers, potentially limiting authorities' ability to defend their currencies during periods of volatility. China's persistent accumulation of gold, now at a record 77.47 million ounces, signals a strategic pivot toward hard assets amid dollar uncertainty and geopolitical tensions, a trend that could influence global commodity markets and reserve management strategies across emerging economies .
The synchronized decline in foreign exchange reserves across China, Japan, and Hong Kong underscores how rising U.S. interest rates are reshaping Asia's financial buffers, potentially limiting authorities' ability to defend their currencies during periods of volatility. China's persistent accumulation of gold, now at a record 77.47 million ounces, signals a strategic pivot toward hard assets amid dollar uncertainty and geopolitical tensions, a trend that could influence global commodity markets and reserve management strategies across emerging economies .