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China's forex reserves at $610 billion

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March 07, 2005 14:17 IST

China's central banker on Monday acknowledged the presence of some speculative funds in the nation's record foreign exchange reserves of nearly $610 billion but asserted that the volume was 'not big.'

China's forex reserve, which surged to $609.9 billion -- second only to Japan -- at the end of 2004, consist largely of trade surpluses, non-trade surpluses and capital investment from overseas, he said.

Japan's forex reserves stand at $840.56 billion. India, with $135.65 billion, has the world's fifth largest forex reserves. Taiwan (3rd), South Korea (4th), and Hong Kong (6th) are the other nations that make the world's top list of forex reserves.

There might be some speculative funds betting on the yuan appreciation, or the so-called 'hot money' flowing into China, but the amount was 'not big', Governor of the People's Bank of China, Zhou Xiaochuan said.

The reason for the low level of hot money was that China still implemented foreign exchange controls to some extent, he said at a press conference on the sidelines of the annual session of the National People's Congress, China's Parliament.

The forex reserves started to surge in 2002 on the backdrop of China's economic start-up following the Asian financial crisis, he said.

In response to another question whether China would hold more Euro-denominated assets, he said forex reserves should be denominated in a number of currencies (instead of the US dollar alone) and comprise diversified products in a bid to ward off risks.

"We have long attached importance to the holding of a certain amount of euro assets," the central banker said without going into details.
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