China’s Foreign reserves at US$853.7b, ‘probably outstrip Japan’s’

AP via The South China Morning Post

ASSOCIATED PRESS in Shanghai
Updated at 12.06pm:
China’s foreign currency reserves reached US$853.7 billion (HK$6.66 trillion) by the end of February, probably topping Japan’s to become the world’s largest, a state-run newspaper reported on Tuesday, citing an unnamed source.
Japan’s foreign currency reserves – the amount of currency from abroad the government holds in its accounts – had reached US$850 billion at the end of February, Tokyo announced earlier.
Chinese central bank officials refused comment on the latest figures, reported in China Business News, saying data on foreign exchange reserves are only released quarterly. Those figures are due to be issued in mid-April.
China’s foreign currency reserves rose 34 per cent last year to a record US$818.9 billion amid surging exports.
Foreign reserves have soared as China’s surging exports, especially to the United States, have brought home billions of US dollars and other foreign currencies. China’s global trade surplus last year reached US$101.9 billion, up from US$32 billion the year before.
China’s foreign currency regulator buys dollars and other foreign currencies that come into the economy and stockpiles them in US Treasury bonds and other assets in order to limit the flow of currency into the economy, which it worries could set off inflation.
Analysts estimate that three-quarters of China’s reserves are in US Treasuries, reflecting the dominance of the dollar.
At current rates of growth, Beijing’s foreign exchange reserves could reach US$1 trillion this year.
Published in the South China Morning Post. Copyright © 2006. All rights reserved.

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