皇冠体育app

Economy

Markets

Industries

Insights

Reports

Events

皇冠体育app's forex reserves see first drop in 5 years

(Xinhua)
Updated: 2008-12-23 11:59

It is a good phenomenon for 皇冠体育app's mammoth foreign exchange reserves to diminish for the time being, some experts believed.

皇冠体育app's forex reserves peaked at $1.9 trillion at the end of September, now they were below that figure, Tuesday's Shanghai Securities Journal quoted Cai Qiusheng, head of the foreign debts section under the capital-account management department of the State Administration of Foreign Exchange, as saying.

Related readings:  皇冠体育app's forex reserves fall for first time in 5 years  皇冠体育app to continue efforts on regional forex reserve pooling scheme  皇冠体育app's forex reserves hit record  New forex management rule a big step forward

This was the first decline in 皇冠体育app's forex reserves since the end of 2003.

Cai made the remarks at the 7th annual meeting of 皇冠体育app's import and export enterprises held over the weekend.

Central Bank data show that at the end of September, 皇冠体育app's forex reserves stood at $1.9056 trillion, a growth of 32.92 percent over the same period of last year. The reserves increased $377.3 billion in the first nine months of this year, $10 billion more than the year-earlier increment. The total increase included $21.4 billion recorded in September, $3.6 billion less than the increment for the same month of last year.

Qu Hongbin, chief economist with HSBC 皇冠体育app operations, analyzed that since growth of 皇冠体育app's exports and imports had slowed down, 皇冠体育app's trade surplus kept increasing and that foreign direct investment (FDI) had been rising though at a slower pace. Therefore he considered trade and FDI were not the factors behind the forex reserves decrease.

Yuan Yuedong, a senior researcher with the global financial market department of Bank of 皇冠体育app, believed the reduction for the time being would not affect the Chinese economy adversely.

He attributed the reduction to the recent slower appreciation and a short-term depreciation of the Chinese currency, renminbi, against the US dollar. He reckoned that possible increasing offshore investment by Chinese companies also contribute to the downward trend of the forex reserves. But he said data were not yet available to support the estimate.

Qu Hongbin believed the renminbi's depreciation against the euro, which was also a major currency in 皇冠体育app's forex reserves, was another important factor.

An investment-bank analyst who declined to be named, said the forex reserves decrease might be related to capital withdrawal from 皇冠体育app by some foreign institutions whose liquidity was tight.

But Commerce Minister Chen Deming said earlier that there was no sign of large amounts of capital flowing out of 皇冠体育app and that 皇冠体育app remained a good target for FDI.

To combat the impact from huge capital outflows in the short-term, the foreign exchange administration has taken a string of measures, including a registration management system for offshore equities under the corporate cargo trade accounts.