China's foreign exchange reserves fell only slightly in May despite a sharp drop in the yuan currency which many analysts had feared would trigger further capital outflows from the country's stock and bond markets.

The yuan dropped 2.7% against the dollar in May, while the dollar last month rose 2.5% against a basket of other major currencies =USD. Dollar gains tend to erode the value of China's other non-dollar asset holdings.

China's foreign exchange reserves - the world's largest - fell by $28 billion to $3.177 trillion last month, slightly less than the $3.181 trillion tipped by a Reuters poll of analysts and $3.205 trillion in April.

"The Chinese authorities have not intervened in the currency market during the recent wave of renminbi depreciation, and that is partly tied to intentions to offset pressures in the export sector with a cheaper currency," said Xu Tianchen, senior economist at the Economist Intelligence Unit.

China's exports shrank much faster than expected in May, according to other official data released earlier on Wednesday, while imports extended declines, raising doubts about the country's fragile post-pandemic economic recovery.

China's foreign exchange regulator said in an accompanying note that its reserves had been "influenced by the fiscal and monetary policy expectations of major economies and global macroeconomic data."

China posted outflows of $1 billion in debt and $3.8 billion in stocks in April, data from the Institute of International Finance shows. Chinese debt has seen outflows in eight of the past 12 months, the data shows, while equities posted a monthly outflow after five months of inflows.

With rising interest rates and inflation squeezing the U.S. and Europe, China has sought to increase the amount of gold it holds, with its reserves steadily increasing since November.

China held 67.27 million fine troy ounces of gold at the end of May, up from 66.76 million ounces the end-April.

The value of its gold reserves fell to $132.15 billion at the end of May from $132.35 billion at the end-April. (Reporting by Joe Cash and Albee Zhang; Editing by Kim Coghill)