Yi Gang, the vice-governor of China's central bank, on Sunday shrugged off concerns about the possibility of an extended fall in China's foreign exchange reserves and reasserted her confidence in the strength of the Yuan.

Speaking to state news agency Xinhua, Yi said, "The falls in forex reserve was mainly because residents increased their holdings and cut their forex debts. This process has a limit and the capital outflow will gradually slow down."

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"We have full confidence in the fundamentals of Renminbi, believing its exchange rate will be increasingly determined by the market fundamentals rather than short-term speculation," she added.

Yi gave the interview shortly after attending ongoing G20 financial ministers' meeting in Shanghai.      

China's Central Bank Chief Zhou Xiaochuan also downplayed concerns about the country's falling foreign exchange reserves while speaking at the G20 meeting on Saturday. He described the recent fall in reserves as 'normal'.

China owns the largest foreign exchange reserves in the world. But in recent years it has been burning its reserves at a pace that has many economists worrying. Since mid-2014, China's reserves have fallen by $762 billion, with $99.5 billion shrinking in January this year. Currently, China's foreign exchange reserves stands approximately at $3.23 trillion.

Restoring stability in the Yuan, which has witnessed consecutive devaluation in recent years, and bailing out crashing stock market has been putting strenuous pressure on China's foreign exchange reserves.

America's Federal Reserve and other global financial institutions have been requesting better management of the Yuan from China. On Saturday, Zhou assured ministers at the G20 summit that China would not be staging another devaluation of the Yuan.  

Zhou said that since there is still enough room in the country's monetary policy, the need to further devalue the Yuan would not arise.       

TagsChina's central bank, Chinese Economy, China Foreign Exchange Reserves