New foreign currency loans in China fell $4.9 billion month-on-month to $5.2 billion in April, and analysts attribute the plunge mainly to the scarcity of foreign currency in the country, the 21st Century Business Herald reported Wednesday.

China's foreign currency loans were surging during the past months compared to a slow increase in foreign currency deposits. The loans went up to $136.2 billion last year, but deposits increased by only $16.2 billion.

In the first quarter of this year, new loans and deposits in foreign currency totaled $29.2 billion and $4.7 billion, respectively, and in April new foreign currency deposits declined by $9 billion.

To pare down the surging foreign currency loans, especially the short-term debts that boosted up the country’s foreign reserves and funds outstanding for exchange, the State Administration of Foreign Exchange slashed quota for short-term foreign debt of 2010 by 1.5 percent year-on-year to $32.4 billion at the end of April.

Analysts say the expectation on yuan's appreciation and the favorable lending rate of the US dollar drove enterprises to borrow in dollar.

As there is still margin between the lending rate of yuan and dollar, and rising expectation on yuan's rise, foreign currency loans will increase in the future though banks' lacking of foreign currency would slow the growth pace, said analysts.

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