China's foreign exchange reserves posted their biggest monthly fall on record in August reflecting Beijing's attempts to halt a slide in the yuan and stabilise financial markets following its surprise move to devalue the currency last month.

China's reserves the world's largest fell by $93.9 billion last month to $3.557 trillion central bank data showed on Monday.

The drop left market watchers questioning how sustainable China's efforts to support the yuan are as capital flows out of the country due to fears of an economic slowdown and prospects of rising US interest rates.

"Frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity" said Zhou Hao senior economist at Commerzbank in Singapore.

The offshore yuan weakened following the data release to trade at a record discount to the onshore rate suggesting investors believe the official rate is being kept too high.

There was relief though that the dip in reserves had not been larger with some commentators predicting in the run-up to the announcement that the drop could be as much as $200 billion. Still economists estimated that the fall was probably slightly above the $94 billion figure given the positive impact of valuation changes as the dollar fell against major currencies. A large portion of China's reserves are held in US Treasuries.

The decline in reserves has quickened following China's near two per cent devaluation of the yuan on August 11 which stoked fresh concerns about the economy and heavy selling of the currency.

Chinese policymakers are now determined to show their financial markets are back to normal after the devaluation of the yuan or renminbi coupled with wild swings in its stock markets caused jitters in markets around the world.

China's Central Bank Governor Zhou Xiaochuan told financial leaders from the world's 20 biggest economies over the weekend that Chinese financial markets had almost completed their correction after a steep run up in stock prices in the first half of the year.

"Currently the renminbi to dollar exchange rate already tends toward stability the stock market adjustment is already roughly in place and financial markets can be expected to be more stable" Zhou told G20 finance ministers in Turkey according to a statement from the central bank. Zhou's comments coupled with pledges from regulators to deepen financial market reforms had limited impact in stabilising China's stock markets on Monday which closed before the release of the reserves data.

China's stocks regulator said late on Sunday that it would take more steps to ensure stable markets.

"The government won't normally intervene but when there are severe abnormal fluctuations in the markets the government can't just sit on the sidelines and must take decisive and timely measures" the China Securities Regulatory Commission said.

On Monday the Shanghai stock exchange said the Shanghai and Shenzhen Stock Exchanges and the China Financial Futures Exchange planned to introduce a "circuit breaker" on the CSI300 index to stabilise the market. Also on Monday China revised down its reading for growth in 2014 saying the economy expanded by 7.3 per cent a notch below the previous estimate of 7.4 per cent.