China's foreign exchange reserves rose more than expected in July as the dollar weakened and the yuan firmed as the world's second-largest economy showed further signs of recovery.

China's foreign exchange reserves - the world's largest - rose $42.06 billion in July to $3.154 trillion, central bank data showed on Friday.

Economists polled by Reuters had expected the country's reserves, the world's largest, to rise by $12.67 billion to $3.125 trillion, likely due to fluctuations in global exchange rates and the prices of foreign bonds that China holds.

Foreign inflows into Chinese stocks and bonds have picked up recently as investors bet on an economic rebound. Strict capital controls have also largely helped China keep outflows under control over the past year despite the shock from the coronavirus outbreak, a prolonged trade war with the United States and weakening economic growth.

The yuan rose 1.3% against the faltering dollar in July, while the dollar fell about 4% in July against a basket of other major currencies.

China held 62.64 million fine troy ounces of gold at the end of July, unchanged from the end-June.

The value of China's gold reserves rose to $123.09 billion at the end of July from $110.76 billion at the end-June.