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China's Forex Reserves Climb by $31.7 Billion in May to Highest Level Since 2015

China's foreign exchange reserves rose to their highest level in over a decade, according to data from the State Administration of Foreign Exchange on Sunday.The world's largest holdings of foreign exchange reserves increased by 0.93% in May, or $31.7 billion, to $3.442 trillion.The reading surpassed the $3.42 trillion median forecast in a Trading Economics survey of economists and marks the highest total since late 2015.SAFE attributed the improvement to factors such as the global macroeconomic environment and expectations regarding the monetary policies of major economies, the strong US dollar and higher prices of major major global financial assets."The combined effect of exchange rate conversion and asset price changes led to an increase in foreign exchange reserves that month," SAFE said in a statement."China's economy maintained a steady and progressive development trend, with solid progress in high-quality development, providing support for maintaining the basic stability of foreign exchange reserves."China's gold reserves rose by 320,000 troy ounces month over month to 74.96 million troy ounces at the end of May, state-run Global Times reported Sunday, citing SAFE data.The latest purchase extended the People's Bank of China's buying streak to 19 months, marking the longest since at least 2015, Bloomberg News reported.Financial analyst Zhao Qingming told Global Times that China's steadily growing gold purchases help the country bolster the structure of its reserves, while helping hedge against risks from major currency fluctuations.Zhao noted that rising gold reserves will shore up the yuan's credibility and establish a foundation for its internationalization.On Friday, the Chinese renminbi strengthened 46 pips to 6.8157 against the US dollar, according to the China Foreign Exchange Trade System.However, Carie Li, a strategist at DBS Bank Hong Kong, told Bloomberg over two weeks ago that "the PBOC may come in to smooth or slow down the yuan's appreciation" as "[c]orporates probably underhedged the FX risk," with over 1,000 China exporters flagging the yuan's continued strength in their earnings reports.