China's forex reserves jump to $1.8 trillion

BEIJING - CHINA'S foreign exchange reserves, already the world's biggest, surged to US$1.202 trillion (S$1.824 trillion) in the first quarter.

The central bank said yesterday that the reserves had swelled by US$135.7 billion between January and March, more than half the nation's US$247.3 billion reserves accumulation for the whole of last year.

The record quarterly rise followed increases of US$78.4 billion in the fourth quarter, US$46.8 billion in the third and US$66 billion in the April to June period of last year.

Analysts said the jump, which will intensify upward pressure on the yuan, had confounded expectations given a narrowing in the size of China's trade surplus in the first three months.

'It is a bit strange because there was a huge gap between the forex reserve increase and the size of the trade balance in the first quarter,' said Deutsche Bank economist Jun Ma in Hong Kong.

'Implication-wise, it certainly continues to put pressure on the currency despite the significant drop in the trade balance in March.'

China's reserves have ballooned in recent years as the central bank, in order to hold down the yuan, has bought most of the US dollars generated by a growing trade surplus, inflows of foreign direct investment and speculative capital.