April 11, 2009

China’s foreign reserves grow 16 percent

China's foreign exchange reserves grew 16 percent in the 12 months ending in March, rising to $1.95 trillion, officials said Saturday.

While foreign exchange reserves rose $7.7 billion in this year's first quarter, the increase pales in comparison to last year's first-quarter rise, which was $146.2 billion higher, the state-run Chinese news agency Xinhua reported.

Analysts told Xinhua the smaller growth of foreign exchange reserves in the first quarter was because of changes in the value of non-U.S.-dollar assets and money flows under the capital account.

Changes of foreign exchange reserves in the first quarter were mainly driven by non-U.S.-dollar assets' volatile fluctuation, said Liu Yuhui, an economist with Chinese Academy of Social Sciences.

He reportedly noted that during the first quarter, especially early on in the period, non-dollar foreign currencies dropped heavily against the U.S. dollar, meaning that about 40 percent of China's non-dollar assets depreciated.