JPMorgan Econ FI-China Greater-than-expected $45bn fall in FX reserves-108102526

JPMORGANAsiaPacificEconomicResearch07May2024China:Greater-than-expected$45bnfallinFXreservesChina’sAprilFXreservesmissedmarketexpectations.ReservesdeclinedUSEmergingMarketsAsia,Economic$44.8bnto$3,200.8bn(J.P.Morganforecast:$3232.8bn,marketconsensus:andPolicyResearch$3229.5bn),thelargestmonthlyfallinmorethanhalfayear.Ourcurrentbaselineforecastlooksforexportstorise3.3%m/msaandimportstoinchup0.6%inApril,TingtingGeleavingthetradesurplusatanelevatedUS$79.7bn.Thedisappointmentintoday’sFXreservesreportlikelysuggestsasmaller-than-expectedtradesurplusand(852)2800-0143currentaccountsurplus.Goldreservesroseforthe18thconsecutivemonth,thoughtingting.ge@jpmorgan.comatamuchslowermonthlypace.ThiswaspartlyduetoelevatedgoldpricedespitethemodestretreatinthesecondhalfofApril.FromNovember2022toApril2024,HaibinZhuChinahasincreaseditsgoldreservesby10.2mnoz,or+16.2%.(852)2800-7039ImpliedcapitaloutflowreturnedtoanelevatedUS$47.0bnafterinflowsthehaibin.zhu@jpmorgan.compriortwomonths,partlyduetoassetvaluationeffectamidmarketrepricingontheFed’spivot.Underourlatestforecast,welookforthecurrentaccountGraceNgsurplustoinchuptoUS$24.7bninAprilfrom$20.1bnonaveragein1Q.NotethattheUSdollarindexmovedupfrom104.5to106.2,leadingtoanestimatedcurrency(852)2800-7002valuationlossofUS$22.6bn.Withthat,wetentativelyestimateaUS$47.0bngrace.h.ng@jpmorgan...