China’s reserves shrunk by nearly a fifth and stood at $3.23 trillion, a level that has prompted
speculation about how much lower Beijing will let them go.
With a smaller pot of reserves, Chinese leaders
have less room to maneuver, should the economy undergo a sudden shock. The
reserves situation also weakens China's control over the value of its currency,
the renminbi.
This would slow down the China's
growth and can affect the global markets as well.
A year and a half ago, China held as much as $4
trillion in foreign exchange reserves. The reserves represented a symbolic
trophy for China's leaders, who have described them as the "blood and
sweat" of the workers and upheld them as a sign of national strength.
Source: Economic times
