Albert Edwards, Research Analyst at Societe Generale, notes that China has burned through almost $800bn of its FX reserves mountain since it peaked at almost $4 trillion in mid-2014. Key Quotes “January’s FX data to be released this weekend is set to register another sharp drop of $120bn (consensus estimate). But at $3.2 trillion, the market remains content that massive firepower remains to support the renminbi. It does not. Our economists estimate that when FX reserves reach $2.8 trillion – which should only take a few more months at this rate – FX reserves will fall below the IMF’s recommended lower bound. If that occurs in the next few months, expect to see a tidal wave of speculative selling, forcing the PBoC to throw in the towel and let the market decide the level of the renminbi exchange rate.” For more information, read our latest forex news.