China's Foreign Exchange Reserves Fell to $3.4 Trillion in September

China's foreign exchange reserves fell by $38.1 billion in September 2026 to settle at $3.4003 trillion, representing a month-on-month drop of 1.11%, according to official data released by the State Administration of Foreign Exchange. The decline ended two consecutive months of increases and was attributed primarily to currency translation effects and falling global financial asset prices driven by a surging U.S. dollar and expectations around U.S. Federal Reserve policy. Meanwhile, China's gold holdings rose to 77.47 million ounces.

The $3.4 trillion mark provides China with a substantial liquidity buffer against global financial volatility. The September contraction was driven by valuation effects rather than balance-of-payments distress, demonstrating the relative resilience of China's external portfolio during periods of international market turbulence.

China's foreign exchange reserves declined to $3.4003 trillion at the end of September 2026, dropping by $38.1 billion or 1.11% from the previous month, according to data released by the State Administration of Foreign Exchange. The pullback ended two consecutive months of reserve expansion. Officials at the foreign exchange regulator attributed the monthly decline to a combination of currency conversion effects and broad asset repricing. In September, shifting macroeconomic conditions and major central bank policies lifted the U.S. Dollar Index while depressing overall global financial asset valuations. Private-sector analysts pointed to specific overseas financial pressures. Wen Bin, chief economist at China Minsheng Bank, noted that tightening expectations surrounding the U.S. Federal Reserve weighed heavily on global securities. During the month, the Federal Reserve raised its policy benchmark by 25 basis points to a range of 3.75% to 4.00%, with rate projections and hawkish commentary signaling the possibility of further tightening. Market anxiety was further stoked by elevated oil prices briefly crossing $100 per barrel amid Middle East tensions and robust U.S. economic data. These dynamics led to broad selloffs in global debt and equities. The U.S. Dollar Index gained 2.0% to finish at 101.5, diminishing the dollar value of China's non-dollar holdings. Concurrently, the dollar-hedged Barclays Global Aggregate Total Return Index dropped 1.6%, while the S&P 500 slipped 0.5%. Even as foreign currency reserves contracted, China expanded its physical gold holdings. Official figures showed gold reserves rose to 77.47 million ounces at the end of September, reflecting ongoing efforts to diversify sovereign balance-sheet holdings. Looking ahead, domestic analysts maintain that China's external balance sheet remains well-cushioned. Wen observed that strong export competitiveness continues to serve as an anchor for China's international payments, helping insulate official reserves against external shocks.