Zhou sees country's forex reserves still growing

By Yanping Li | January 13, 2009, Tuesday |

Print Edition

CHINESE central bank governor Zhou Xiaochuan said the country's foreign-exchange reserves, the world's largest, are still increasing.

"It is still growing, but at a slower pace," Zhou said yesterday in Basel, Switzerland, where he's attending a meeting at the Bank for International Settlements.

China's forex reserves fell for the first time in five years, a government official, Cai Qiusheng, said last month. The reserves stood at US$1.9 trillion at the end of September.

"The US dollar is the reporting currency, so any significant movement of the dollar against other currencies has a big impact on the reported number," Zhou said. "It may not necessarily mean any serious changes of the reserves."

Falling interest rates and a halt in gains by the yuan against the dollar have brought the risk of an exodus in cash from China as investors seek better returns elsewhere, Bloomberg News said. The role of the nation's forex reserves as "the last protection" against economic risks must be preserved, China's currency regulator said on January 6.

Zhou said China's "exports continued to decline" in December. While he said he hadn't seen the official figure, he predicted a 2-percent to 4-percent drop from a year ago.

"We guessed imports declined quite significantly, too, because economic activity was not as strong as a year before," Zhou told reporters.

Economy

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Zhou sees country's forex reserves still growing

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