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 show that, as of the end of March 2026, China’s foreign exchange reserves totaled $3.34T, down $85.7 billion from the end of February, a decline of 2.5%. At present, China’s foreign exchange reserves remain at a high level for the past decade, staying steadily above $3.3 trillion for eight consecutive months.

Regarding the month-on-month decline in the foreign exchange reserves in March, the State Administration of Foreign Exchange analyzed that, affected by factors such as the global macro environment, the monetary policies of major economies and related expectations, the U.S. dollar index rose, while prices of major global financial assets fell. Under the combined effects of factors including currency translation and changes in asset prices, the foreign exchange reserves decreased during the month.

Since March, developments in the Iran situation have triggered severe volatility in global assets. Oil prices surged, while global asset prices declined broadly. Under the influence of heightened expectations for Federal Reserve rate hikes and the return of safe-haven funds, the U.S. dollar index strengthened in March, and the yield on 10-year U.S. Treasury notes increased.

“Rising oil prices have stoked inflation expectations. The market has even started pricing in Fed rate hikes. Supported by the dual factors of maintaining high interest rates for longer and the return of safe-haven funds, the U.S. dollar index has continued its strengthening trend.” Minsheng Bank’s chief economist Wen Bin told Securities Times reporter.

From the perspective of exchange-rate factors, in March the U.S. dollar index rose 2.4% month on month. During the month, it briefly broke above the 100 level. Meanwhile, 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. Treasury notes increased by 33 basis points to 4.3%. Global stock markets saw intense volatility and moved lower overall, and the prices of major financial assets generally fell.

Against the backdrop of increased external risk shocks, in March China’s foreign exchange reserves remained firmly above $3.3 trillion, providing a more solid safety cushion for two-way exchange-rate fluctuations. The State Administration of Foreign Exchange noted that China’s economic performance overall remains steady, with progress while maintaining stability, and that new achievements have been made in high-quality development, providing support for foreign exchange reserves to remain broadly stable.

“With the switch in growth momentum among major economies, the space for the U.S. dollar index to rise in one direction is limited.” Pang Ming, a specially appointed senior research fellow at the National Financial and Development Laboratory, told reporters. Once the Fed’s policy shift becomes definite, exchange-rate translation factors will change from a “drag” to a “contribution,” driving a rebound in the level 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 pillar of the balance of international payments: against the backdrop of oil-price shocks disrupting global production and supply chains, 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 facilitation level for cross-border investment and financing continues to improve, foreign direct investment will maintain steady operations. At the same time, the valuation advantage and allocation value of RMB assets are becoming more prominent, and portfolio investment is expected to continue to see inflows on a reasonable scale.

The official reserve asset data updated on the day also show that, as of the end of March 2026, China’s official gold reserves were 74.38 million ounces, up 0.16 million ounces from the end of last month. This is the first time since March 2025 that the People’s Bank of China increased its monthly holdings by more than 100k ounces. At present, the central bank has increased gold holdings for 17 consecutive months.

Gold is an important component of the diversified composition of international reserves of countries, with advantages such as risk hedging, protection against inflation, and long-term preservation and appreciation. Since March, gold prices have undergone sharp adjustment. Regarding the reasons for the significant drop during the month, Luo Zhiheng, chief economist and director of the research institute at Yuekai Securities, said in a research report that the main factors include: geopolitics pushing inflation expectations higher and expectations of monetary tightening; investors taking profits after positioning at high levels; and liquidity panic triggered by volatility in the stock market leading to passive selling pressure on gold.

“Non-U.S. central banks’ willingness to buy gold remains strong, and is expected to continue to raise the gold price’s central tendency.” Luo Zhiheng said that increasing gold holdings has become an important choice for non-U.S. central banks to strengthen financial security. Emerging market central banks are particularly active, and there is still significant room for reserve growth.

(Editor: Dong Pingping)

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