The People's Bank of China disclosed on Saturday that the reserves -- the world's largest -- had risen 16 percent year-on-year to tally USD 1.95 trillion as at the end of March. "Even with a growth of USD 7.7 billion for the first quarter of this year, the increase was USD 146.2 billion lower than the same period in the preceding year," Xinhua reported.
Analysts say the diminutive growth rate is linked to fluctuations in the value of non-US dollar assets and money flows under the capital account.
"Changes of foreign exchange reserves in the first quarter were mainly driven by non-US-dollar assets' volatile fluctuation," said Liu Yuhui, an economist with the Chinese Academy of Social Sciences (CASS).
During this period - mainly January and February, non-dollar foreign currencies plummeted considerably against the US dollar. The revaluation resulted in significant depreciation of nearly 40 percent of the country's non-dollar assets.
In unison, the country's trade surplus decreased throughout the first quarter as a result of declining foreign demands for Chinese exports.
Exports dropped 17.5 percent in January, 25.7 percent in February and 17.1 percent in March. In February, China's trade surplus tumbled by USD 34.3 billion to just USD 4.8 billion.
Official statistics indicate that during the first two months, actually-utilized foreign direct investment dropped by 26.2 percent.
A great proportion of China's foreign exchange reserves are invested in US treasuries and banknotes.
MP/SC/MMN
Sunday, 12 April 2009
China's FX reserves growth collapses
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Sun, 12 Apr 2009 14:57:46 GMT
A recent report has revealed that Chinese foreign exchange reserves have declined dramatically owing to reduced exports in recent months.
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