As of the end of March, foreign exchange reserves were $3,342.1 billion, and gold reserves have increased for 17 consecutive months.

How does the Middle East conflict affect fluctuations in China’s foreign exchange reserves?

The State Administration of Foreign Exchange announced on April 7th that as of the end of March 2026, China’s foreign exchange reserves totaled $3,342.123 billion, a decrease of $85.68B from the end of February’s $3,427.807 billion, a decline of 2.5%.

In response, the State Administration of Foreign Exchange stated that in March 2026, influenced by global macroeconomic conditions, major economies’ monetary policies and expectations, the US dollar index rose, and prices of major global financial assets fell. Factors such as exchange rate conversion and asset price changes combined to cause a decline in foreign exchange reserves that month.

“In March, the ongoing escalation of the Israel-U.S. conflict, Iran’s blockade of the Strait of Hormuz, and disruptions to Middle Eastern oil exports led to a surge in crude oil prices, with global asset prices broadly falling. Rising oil prices increased inflation expectations, and markets even began betting on the Federal Reserve raising interest rates. Under the dual support of prolonged high interest rates and a flight to safe assets, the US dollar index continued to strengthen. Due to the combined effects of asset price changes and exchange rate fluctuations, foreign reserves fell by $85.7B to $3,342.1 billion at the end of March,” said Wen Bin, Chief Economist at China Minsheng Bank.

The foreign exchange reserve balance ended a seven-month streak of continuous growth in March.

From August 2025 to February 2026, China’s foreign exchange reserves increased by $29.92B, $16.5B, $4.68B, $3.03B, $11.5B, $41.21B, and $28.73B respectively.

Regarding the future trend of foreign exchange reserves, the Foreign Exchange Bureau stated that China’s overall economic operation remains stable with steady progress, and high-quality development has achieved new results, providing support for maintaining the basic stability of the reserve scale.

Wen Bin believes that looking ahead, exports will continue to play a fundamental role in the balance of payments: since the beginning of the year, China’s exports have performed far better than expected, with a year-on-year growth rate of 21.8% in January and February. This not only reflects strong external demand but also results from the diversification of China’s export markets and upgrading of export product structures. Amid the global supply chain disruptions caused by oil price shocks, China’s advantages in new energy manufacturing and entire industrial chains will be further highlighted. Regarding cross-border capital flows, as China’s service sector continues to expand its market access and institutional opening steadily deepens, the level of cross-border investment and financing facilitation continues to improve, and foreign direct investment is expected to remain stable; at the same time, the valuation and allocation advantages of RMB assets are becoming more prominent, and securities investment is likely to continue a reasonable inflow. China’s overall economic operation remains stable with steady progress, and high-quality development has achieved new results, providing a solid foundation for maintaining the basic stability of foreign exchange reserves.

The gold reserves announced on the same day showed that China’s gold holdings have increased for 17 consecutive months, with the growth rate expanding.

According to the official reserve asset data updated by the People’s Bank of China on April 7th, as of the end of March 2026, China’s gold reserves stood at 74.38 million ounces, an increase of 160k ounces from the end of February’s 74.22 million ounces.

China’s central bank began increasing gold holdings in November 2024, and by the end of March 2026, it had accumulated gold for 17 consecutive months.