(Yicai Global) Feb. 12 -- China's foreign exchange reserves increased in value for the third consecutive month in January due to to fluctuations in exchange rates and changes in bond yields. 

Forex reserves increased to USD3.1 trillion at the end of January, up 0.5 percent from the previous month. The value of Chinese holdings of foreign government bonds increased. 

When converted into US dollar, the euro-denominated part of the forex  reserves lost some of their value while the yen-denominated part gained,  Wen Bin, the chief analyst of China Minsheng Bank, told Yicai Global.

The supply and demand in China's foreign exchange market was balanced in  January, and cross-border capital flows were generally stable, said Wang  Chunying, a spokesperson of the State Administration of Foreign  Exchange, adding that major currencies rose against the US dollar and  that the value of financial assets gained. 

The global economic growth is facing downward pressures, and the  international environment is unstable, Wang said. However, the Chinese  economy maintains a slightly growing trend, and it boasts a  self-balancing model regarding its cross-border transactions, she added.

The size of China's forex reserves have a sound expectation for stability,  Wen said. Changes in valuations have contributed to the increase of such  reserves while settlement banks and sales businesses have strengthened  their support, Wen added.

In December, the deficit of foreign exchange settlement and sales by banks  on behalf of clients narrowed by more than one half to USD7.1 billion.  The total amount involved in contracts for forward settlement of  foreign exchange with banks rose to a record high of USD9.6 billion  since March 2014, while the surplus widened by USD5 billion, which  indicates appreciation expectations for the redback. The data for  January is still pending. 

In January, major indicators of Chinese cross-border business activity,  the New Export Orders Index and Purchasing Managers Index regarding  imports, both rebounded from the previous month but yet remained in the  contraction territory.

Editor: Emmi Laine