Forex reserves reach record high
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China's foreign exchange reserves, the world's largest, rose $194 billion in the third quarter to reach a record $2.65 trillion, which some foreign countries will likely use to pressure China to push forward a faster yuan appreciation, economists have said.
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A woman looks at yuan and US dollar banknotes in Fuyang, Anhui province. [Photo/China Daily] |
But the yuan's appreciation will cause the real value of the country's forex stockpiles to decline, so policymakers must strike a balance between the two positions, analysts have also said.
The country's total reserves increased by 16.5 percent year-on-year, according to figures released by the People's Bank of China, the central bank, on Wednesday.
"The reserve build-up is set to lead to growing foreign pressure for a faster yuan revaluation," said Sun Shijian, an economist at Fudan University in Shanghai.
The US House of Representatives has passed a bill empowering the government to use punitive measures if other countries, including China, are found touse an undervalued currency to benefit their trade with the US.
The yuan has risen by 23 percent since July 2005 and by more than 2.2 percent since June 19, when China vowed to make the currency more flexible.
But the increase seems to fall short for some foreign governments which continue to urge China to let the yuan appreciate more and faster.
"Foreign exchange rates may not be directly linked to the value of the yuan," Zhuang Jian, senior economist of the Asian Development Bank (ADB) in China, said.
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