Turning Tides in China’s Forex Reserves Could Leave Australia Awash with New Investment

Foreign exchange (forex) reserves in China increased for the fourth consecutive month in May 2017. It is the longest growth period in Chinese forex in almost three years. If the trend continues, Chinese financial regulators may ease capital controls currently inhibiting foreign direct investment.

Central banks use forex reserves to offset currency depreciation when the domestic currency is converted to purchase foreign assets. Currency conversion involves selling off domestic currency, so…