China’s capital outflow accelerated in November, forcing the Chinese government to more aggressively prop up the yuan via interventions, according to an estimate from Capital Economics.

“The pick-up in capital outflows appears to have been predominantly driven by increased expectations for renminbi depreciation,” said Julian Evans-Pritchard, a China economist at Capital Economics.

An increase in offshore interest rates on expectations of a U.S. Federal Reserve interest-rate hike is also likely to have contributed to outward flow of capital, he added.

By Evans-Pritchard’s reckoning, net capital outflow from China totaled $113 billion, compared with $37 billion in October.

The economist’s estimates are based on the fact that the country’s foreign exchange reserves fell $87 billion in a month to $3.438 trillion at the end of November, marking its lowest level in more than two years.

“Our calculations suggest that exchange rate fluctuations will have reduced the dollar value of the portion of the reserves held in other currencies by around $30 billion. This points to PBOC FX sales of $57 billion last month,” he said.

Capital Economics

That also suggests that if recent trends remained intact, China may have continued to unload U.S. Treasurys to finance its foreign-exchange interventions. According to the latest U.S. government data, China’s Treasury holdings slid to $1.258 trillion at the end of September from $1.271 trillion at the end of August.

Meanwhile, Evans-Pritchard predicted that China will not allow a significant weakening in the yuan going forward despite the currency’s inclusion in the International Monetary Fund’s Special Drawing Rights basket.

“Although a weaker renminbi could give a mild boost to export competitiveness, the PBOC appears concerned that a depreciation would set back their efforts to encourage increased international use of the currency and could slow the process of economic rebalancing toward consumption,” he said.

In late November, the IMF’s executive board voted to include the yuan in the new SDR basket that will launch on Oct. 1. The inclusion is widely seen as an important step in China’s campaign to become a more influential global economic power.