The People's Bank of China (PBOC), the country's central bank, is increasing the amount of foreign exchange from $20,000 to $50,000 that citizens can buy from February 1.

"By supporting individuals to hold and use foreign exchange, the new rules aim to help improve the international balance of payment," the State Administration of Foreign Exchange said in a statement on its website.

China's foreign exchange reserves have been increasing rapidly because of soaring trade surplus and accelerated foreign direct investment.

The latest statistics of the General Administration of Customs show that China's trade surplus rose to a record $177.5 billion in 2006 from $101.9 billion in 2005. In addition, the country's actualized foreign direct investment last year rose by 5 per cent to top US$63 billion, Commerce Minister Bo Xilai said yesterday.

Official figures show China's foreign exchange reserves rose from $845.2 billion in January 2006 to $987.9 billion in September. It is widely believed that in the fourth quarter, China's foreign reserves had surpassed $1 trillion, the highest in the world.

The fast accumulation of foreign reserves has forced the PBOC to offer more liquidity, adding to worries of credit-driven overheating in the market.

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