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Forex reserves reach US$941b

(China Daily)
Updated: 2006-07-15 05:28

China's foreign exchange reserves hit US$941.1 billion by the end of June this year, up 32.37 per cent from the same period of last year, the People's Bank of China, or the central bank, said on Friday.

In the first six months, China's foreign exchange reserves increased US$122.2 billion, US$21.2 billion more than the same period of last year, the bank said.

In June, the reserves increased US$16.1 billion, US$3.9 billion less than the same period of last year.

China's foreign exchange reserves have surpassed Japan at the end of February this year, becoming the world's biggest.

In recent years, China's foreign exchange reserves have kept climbing due to the surplus of current and capital accounts in international payment.

In the first six months, China's trade surplus reached US$61.4 billion.

Insiders said that the dramatic increase in foreign exchange reserves will pose pressures on the appreciation of Chinese currency and affect the independence and validity of the country's monetary policies.

They said the increase of US$122.2 billion in the foreign exchange reserves means that the monetary supply of renminbi will rise by almost 1 trillion yuan (US$125 billion).

The outstanding bank loans have been a major concern for the government this year.

On April 28, the PBOC raised the minimum rate commercial banks charge on one year loans in local currency, the yuan, 27 basis points to 5.85 per cent in a move to discourage lending.

The central bank also required domestic commercial banks to raise their required reserves at the central bank by 0.5 percentage points starting July 5.

Xinhua

(China Daily 07/15/2006 page1)