China's foreign exchange reserves grow slower in first quarter

08:47, April 13, 2010      

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In the first quarter of this year, monthly growth of foreign exchange reserves was only around 16 billion U.S. dollars, the lowest since Q2 2009, according to the latest data released by the People's Bank of China (PBOC) April 12.

PBOC data shows that by the end of March 2010, China's foreign exchange reserves increased by 47.9 billion U.S. dollars in the first quarter of 2010 to 2.45 trillion U.S. dollars. The growth in the first quarter was 40.2 billion U.S. dollars higher compared with the same period last year.

Earlier data from the PBOC indicated that in the last three months of 2009, China's foreign exchange reserves expansion stood at 126.7 billion U.S. dollars, indicating that the average monthly growth was around 42 billion U.S. dollars.

The flow of foreign currencies into China showed no sign of a significant slow down, despite the reduced growth rate of China's foreign exchange reserves.

By the end of March, total funds outstanding for foreign exchange were around 20 trillion yuan (2.93 trillion U.S. dollars), showing around 110 billion U.S. dollars of growth compared to the end of 2009.

Zhao Qingming, a researcher with China Construction Bank, noted that the depreciation of the non-dollar currencies might be the reason for the slow down of foreign exchange reserves growth.

Some market analysts believe that the reduced speed of foreign exchange reserves growth was the result of falling trade surplus.

Statistics released by the General Administration of Customs (GAC) revealed a 7.24 billion U.S. dollar trade deficit, the first monthly deficit since May 2004. China's trade surplus has maintained a downward trend in the past few months.

It is also notable that domestic foreign exchange loans were increasing at a faster pace compared to the first two months of 2010, while the rate of foreign exchange deposits kept at a low speed. Analysts pointed out that this may be the result of yuan appreciation expectations.

By People's Daily Online


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