China's foreign exchange reserves dropped slightly in July as downward pressure eased, thanks to a stronger yuan.

According to data released by the People's Bank of China, forex reserves stood at just over US$3.2 trillion at the end of July. The data was basically in line with market forecasts.

Analysts say the reserves have been stable because of a stronger yuan and a reduction in capital outflow.

China International Capital Corporation also attributed the stabilizing forex reserves to a softening U.S. dollar, which boosted the valuation of non-USD reserves.