Forex reserves swell to $1.33 trillion

By Xin Zhiming (China Daily)
Updated: 2007-07-12 07:03

China's foreign exchange reserves increased by $40 billion in June, pushing the total figure to $1.33 trillion, the central bank said yesterday.

It was a 41.6 percent increase year-on-year, the People's Bank of China said in a statement on its website.

The rise could mainly be a result of capital influx in anticipation of a rising yuan and the strong growth in foreign trade surplus, said Zhao Xijun, a finance professor at Renmin University of China.

The central parity rate of the yuan hit a new high yesterday, standing at 7.5712 against the greenback.

The central bank also said household deposits in banks reversed a declining trend, rising by 167.8 billion yuan ($22.2 billion) after a big fall in May.

Analysts said it indicates that people have stopped shifting their bank savings to the stock market, which has seen drastic fluctuations recently.

"The growth in deposits, coupled with the decline in the openings of new stock accounts, points to the changing mood," Zhao said.

In May, household bank deposits decreased by 278.4 billion yuan ($36.8 billion), triggering worries that people may continue to pull their money out of banks to invest in the capital market.

Yuan-denominated lending rose by 16.48 percent at the end of June from a year earlier, slightly lower than in May, the statement said.

Banks extended 2.54 trillion yuan ($335.5 billion) in new loans in the first half of this year. New loans in June totaled 451.5 billion yuan ($59.6 billion), up 14 percent from the same period last year.

(China Daily 07/12/2007 page1)

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