On May 7, the State Administration of Foreign Exchange released the latest statistical data showing that as of the end of April, China's foreign exchange reserves reached $3.4105 trillion, an increase of $68.4 billion from the previous month, representing a growth of 2.05%. This marks the largest monthly increase in nearly 28 months. Concurrently, the central bank has increased its gold reserves for the 18th consecutive month.
The foreign exchange authority stated that China continues to consolidate and expand its stable and improving economic momentum, further demonstrating its resilience and vitality, which is conducive to maintaining the fundamental stability of foreign exchange reserves.
Foreign exchange reserves have reached a new phase high. As of the end of April 2026, China's foreign exchange reserves stood at $3.4105 trillion, up $68.4 billion from $3.3421 trillion at the end of March, with a growth rate of 2.05%. This is the largest increase in nearly 28 months and represents the ninth consecutive month that reserves have remained above $3.3 trillion.
The foreign exchange authority indicated that in April, influenced by macroeconomic data, monetary policies of major economies, and market expectations, the U.S. dollar index declined, and the performance of global major financial asset prices diverged. The combined effects of currency translation and changes in asset prices contributed to the rise in foreign exchange reserves for the month.
Guan Tao, Global Chief Economist at Bank of China Securities, also believes that the rebound in foreign exchange reserves primarily reflects the positive valuation effects resulting from currency translation and asset price changes, driven by factors such as monetary policies and macroeconomic data of major economies. During the month, financial markets gradually became desensitized to geopolitical tensions. The U.S. dollar index turned weaker after two months, declining cumulatively by 1.9% to 98.1. Non-U.S. currencies generally appreciated, while the performance of global major financial asset prices varied. The dollar-denominated hedged global bond index rose by 0.3%, and the S&P 500 stock index increased by 10.4% to 7,209 points, reaching a new historical high.
Driven by the decline in the U.S. dollar index and the significant rise in global financial asset prices, foreign exchange reserves increased month-on-month by the end of April.
Wang Qing, Chief Macro Analyst at Golden Credit Rating, further analyzed that the Middle East conflict experienced a transition from confrontation to negotiation in April, reducing safe-haven demand. Consequently, the U.S. dollar index shifted from an upward trend to a decline, falling by 1.8%. This directly led to the appreciation of non-U.S. dollar assets within China's foreign exchange reserves, boosting the dollar-denominated reserve size. According to Wang Qing's estimates, the depreciation of the U.S. dollar contributed approximately $20 billion to the increase in foreign exchange reserves for the month.
Simultaneously, the easing of tensions in the Middle East led to substantial gains in major global stock indices. Although recent rises in international oil prices have fueled inflation expectations, and the yield on 10-year U.S. Treasury bonds increased by 10 basis points, leading to a decline in bond prices, overall, the changes in global financial asset prices in April had a significant uplifting effect on China's foreign exchange reserves.
Wang Qing expects that, considering various factors, foreign exchange reserves are likely to remain fundamentally stable around $3 trillion in the future. Against the backdrop of increasing volatility in the external political and economic environment, adequately ample foreign exchange reserves can provide crucial support for maintaining the yuan at a reasonable and balanced level and serve as a stabilizer against potential external shocks.
Gold reserves have been increased for the 18th consecutive month. In line with the growth in foreign exchange reserves, China's gold reserves continued their upward trend. Central bank data show that gold reserves stood at 74.64 million ounces at the end of April, an increase of 260,000 ounces from 74.38 million ounces at the end of March. This represents the 18th consecutive month of gold accumulation by the central bank, with the pace of increase notably accelerating compared to the 160,000 ounces added at the end of March.
In April, international gold prices declined for the second consecutive month, serving as a direct incentive for the central bank to accelerate its purchases. Wang Qing analyzed that as developments in the Middle East significantly pushed up international oil prices and expectations for global monetary easing, including potential rate cuts by the Federal Reserve, cooled, international gold prices fell for two months in a row. This likely directly prompted the central bank to speed up its gold acquisitions.
This move aligns with the global trend of central bank gold purchases. The World Gold Council's Q1 2026 "Global Gold Demand Trends Report" indicates that total global gold demand (including over-the-counter transactions) reached 1,231 tons in the first quarter, a 2% year-on-year increase. Although the growth in gold demand was moderate, the total demand value surged to a record $193 billion, a significant 74% rise compared to the previous year.
The World Gold Council believes that global central banks continue to support overall gold demand, adding 244 tons to their reserves in the first quarter. Despite increased gold sales by a few official institutions such as Turkey, Russia, and the Azerbaijan State Oil Fund, central bank gold purchases remained above the previous quarter's level and the five-year average. This further highlights gold's unique role as a core reserve asset for central banks, particularly demonstrating good liquidity during periods of extreme market turbulence.
Wang Qing believes that gold is a universally accepted ultimate means of payment. Increasing gold reserves can enhance the credibility of sovereign currencies and create favorable conditions for steadily and prudently advancing the internationalization of the yuan. Considering various factors, the central bank's continued accumulation of gold remains the general trend.
The yuan exchange rate demonstrates strong resilience. Alongside the dual growth in foreign exchange and gold reserves, the yuan exchange rate has shown strong performance. On May 7, the offshore yuan broke through the 6.8 mark against the U.S. dollar during trading, reaching a high of 6.79772, the highest level since February 2023. The central parity rate for the yuan against the U.S. dollar was set at 6.8487, an increase of 75 basis points.
Since the end of April, the U.S. dollar index has continued to decline, falling below 98 points to date, leading to a broad appreciation of major non-U.S. currencies, including the yuan.
Guan Tao stated that in April, the yuan exchange rate continued to demonstrate strong resilience, following the U.S. dollar index through a process from appreciation to fluctuation. Specifically, the central parity rate appreciated cumulatively by 0.8% from 6.9194 at the end of March to 6.8628, marking the seventh consecutive month of appreciation. The onshore spot rate (the 4:30 PM trading price in the domestic interbank foreign exchange market) and the offshore spot rate showed mixed strength, appreciating by 1.1% and 0.8% respectively compared to the end of March, to 6.8335 and 6.8318. During the period, their highest points reached 6.8138 and 6.8059, respectively.
Guan Tao believes that although the appreciation幅度 of the onshore spot rate was greater than that of the central parity rate, leading to a renewed widening of the deviation between the two, the average daily trading volume of spot inquiries in the interbank market decreased by 18% month-on-month to $41.8 billion, hitting a new low for the year. This indicates that market expectations are fundamentally stable.
The exchange rate indices showed a divergent trend. In April, the three major yuan exchange rate indices displayed mixed movements. The CFETS yuan exchange rate index and the BIS basket yuan exchange rate index shifted from increases of 2.3% and 2.4% last month to declines of 0.7% and 0.4%, respectively. The SDR basket yuan exchange rate index strengthened for the third consecutive month, but the rate of increase narrowed from 1.2% last month to 0.1%.
Regarding the future trend of the exchange rate, Wang Qing judges that, considering the expected continuation of the recovery in China's external trade environment in the coming period, exports are likely to maintain relatively rapid growth overall. The yuan is expected to continue a stable and slightly strengthening trend amid significant fluctuations in the U.S. dollar index. However, as the possibility of a further significant decline in the U.S. dollar index this year is small, this also means that the momentum for passive appreciation of the yuan against the U.S. dollar has significantly weakened. Subsequently, the yuan's exchange rate against the U.S. dollar is expected to be primarily stable, with a low probability of sustained and substantial appreciation.