Record fall in forex reserves during Q1

Foreign exchange reserves held by China slid by the most on record during the first quarter, fueling speculation the central bank sold holdings to support the yuan as money flowed out of the world's second-largest economy.

Reserves dropped $113 billion to $3.73 trillion, the third straight quarterly decline, data from the central bank showed on Tuesday. Yuan positions on the People's Bank of China's balance sheet, a barometer of capital flows, declined by a record 252.1 billion yuan ($40.6 billion), according to a separate statement.

"The PBOC intervened in the first quarter because capital outflows were serious," said Hu Yuexiao, an economist at Shanghai Securities Co Ltd. "An advancing dollar and weak economic fundamentals in China caused the capital outflows, which will probably continue this year. So the central bank will keep intervening to keep the currency stable."