Forex funds top RM3tril

FOREIGN exchange reserves last year jumped US$49.9bil (RM186.8bil) in the fourth quarter to a record US$818.9bil (RM3.06tril), a leap that could intensify pressure on Beijing to let the yuan rise more quickly.  

The central bank said on Sunday that its reserves swelled US$209bil (RM780bil) or 34.3% in the whole of last year, following an increase of US$207bil (RM775bil) in 2004.  

Only Japan, with US$846.9bil (RM3.2tril), has a larger stockpile.  

China's reserves have ballooned in recent years as the central bank has bought most of the dollars generated by a growing trade surplus, inflows of foreign direct investment and speculative capital.  

Coming after statistical revisions last month showing the economy was 16.8% bigger than reported, Rob Subbaraman of Lehman Brothers in Tokyo said the data would hand fresh ammunition to US critics clamouring for a stronger yuan.  

“You have an economy that has just turned out to be bigger than everyone thought. It's growing around 10% and you have reserves growing to new record highs every month. That's providing a lot of arguments for China to move a bit quicker on the currency front,” Subbaraman said.  

Beijing has said it would gradually let market forces drive the yuan's exchange rate.  

Since China revalued the yuan by 2.1% against the dollar in July and adopted a managed float, it has let the currency rise a further 0.52% against the dollar. Gao Shanwen, chief economist at Everbright Securities in Shanghai, expects China's reserves to grow another US$200bil this year as the trade surplus continues to rise. – Reuters  

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