The nation's foreign exchange reserves rose slightly in March to $3.21 trillion, the central bank said on Thursday, the first monthly increase since November 2015 as cooling expectations of U.S. interest rate hikes eased pressure on the yuan.
The level of reserves beat a Reuters poll forecast of a drop to $3.18 trillion. The reserves figure compared with $3.20 trillion in February.
However, reserves were still down sharply from the peak of $3.99 trillion in June 2014.
Capital outflows from China have moderated, according to recent official data, in part helped by expectations the Fed will slow the pace of interest rate rises this year. Federal Reserve Chair Janet Yellen's comments last week that the US should proceed cautiously in adjusting policy have caused a broad retreat in the dollar.
People's Bank of China (PBOC) Governor Zhou Xiaochuan said last month recent data showed a significant easing in capital outflows.
The central bank reported its net foreign exchange sales fell sharply to 228 billion yuan ($35.2 billion) in February, down from 644.5 billion yuan in January, a sign of decreased government intervention in support of the yuan.
Analysts said China still faces a tough job keeping the yuan stable, and a future U.S. rate hike remains a risk for more disruption to China's economy.
The PBOC has moved to curb currency speculation since late December 2015, including limiting yuan-based funds' overseas investments and implementing a reserve requirement ratio on offshore banks' domestic yuan deposits.
The foreign exchange regulator is also studying the introduction of a currency trading Tobin tax, part of efforts to penalize speculators.
China began updating its reserve figures on a monthly basis in June 2015. Previously, reserve figures were not updated regularly.
The country also started to release its foreign exchange reserve data denominated in Special Drawing Rights (SDR) Thursday, along with the U.S. dollar. SDR boasts stable exchange rates and can help evaluate the reserves more objectively, said the PBOC.
