China: $27 bln draw down in the value of its reserves - BBH

China reported a larger than expected $27 bln draw down in the value of its reserves in February and the last time China's reserves fell was in January 2017, according to analysts at BBH.  

Key Quotes

“We suspect that while there were likely private capital outflows, the main drivers are innocuous.  These include distortions from the Lunar New Year as well as some impact from valuation.  The euro, likely the second largest currency in the PBOC reserves, fell 1.8%.  If 20% of China's reserves are in euro-denominated assets, the euro's decline alone would explain an $11 bln fall in China's reserves.  Of course, China's reserves are held in some financial instruments.  Yields rose in February. Lower bond prices could also impact valuation.”