BEIJING, Feb. 27 (Xinhua) -- China's outstanding yuan funds for foreign exchange edged up month on month in January, central bank data showed.

The funds stood at 21.14 trillion yuan (about 3.27 trillion U.S. dollars) at the end of last month, up 9.2 billion yuan from the previous month, according to the People's Bank of China.

As the Chinese yuan is not freely convertible under the capital account, the central bank has to purchase foreign currency generated by a trade surplus and foreign investment in the country, adding funds to the money market. Such funds are an important indicator of cross-border foreign capital flows and domestic yuan liquidity.

China's foreign exchange reserves shrank to 3.2107 trillion U.S. dollars at the end of January, official data showed.

The amount fell by 5.9 billion dollars, or 0.2 percent, from the end of last year, according to the State Administration of Foreign Exchange.