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China’s foreign reserves have fallen to its lowest level in more than two years as expectations of an imminent rate increase by the US Federal Reserve have fuelled outflows from the World’s second largest economy.

Foreign reserves fell by $87.22 billion in November to stand at $3.438 trillion, the lowest level since February 2013, when the reserves stood at $3.395 trillion, according to figures released by the People’s Bank of China on Monday.

China’s reserves have fallen for nine out of 11 months this year as investors sold their yuan holdings amidst worries about slowing economic growth and expectations of a US interest rate increase. The reserves suffered its biggest decline in August – $93.9 billion – after the central bank devalued the yuan by 3 percent over three days.

In October, China’s foreign-exchange reserves rose by $11.39 billion after five months of decline.

China has been tightening its capital controls to stem outflows, which could weaken the yuan against the dollar. In September, the government began cracking down on underground banks and money transfer agents, who help people move money out of China especially via Hong Kong.

China’s frequent intervention in its foreign exchange market had cast doubt over hopes of the yuan becoming a global reserve currency. Yet, the International Monetary Fund announced last week that it would add the yuan to its elite Special Drawing Rights basket of reserve currencies, which includes the U.S. dollar, the euro, the pound, and the yen.

Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst