China's official foreign exchange reserves only include highly liquid assets, a top central banker said on Sunday, seeking to reassure investors that authorities have enough ammunition to prevent a sharp fall in the renminbi.
Investor sentiment towards China's currency has turned sharply negative since a surprise devaluation in August, amid unprecedented capital outflows and concern about the health of the economy. Concern over China's currency policy sparked a global market sell-off early this year.
The People's Bank of China has drawn on its foreign exchange reserves to curb renminbi weakness, but analysts believe the central bank may soon be forced to abandon this policy to prevent reserves dropping below dangerous levels.
Some bearish investors have also expressed skepticism about the reliability of China's official foreign exchange reserves data, which showed reserves at $3.2tn at the end of January — still the world's largest despite declining for 19 months.