China’s Forex Reserves Near $2 Trillion

When China’s foreign exchange reserves breached the $1 Trillion mark in November 2006, it was a momentous occasion. Over the following 18 months, however, analysts yawned as the reserves nearly doubled in size. In the month of April, alone, China added an astounding $75 Billion to its stockpile, bringing the total to $1.76 Billion. Analysts attribute this sudden increase to a massive inflow of hot money, as
investors seek to profit from both the Yuan’s inevitable appreciation and the widening interest rate spread between China and the US. The Central Bank of China also recently announced the official 2007 trade numbers, which reveal a 49% increase in the country’s current account surplus, to $370 Billion. By no coincidence, this news caused the highest daily appreciation in the Chinese Yuan in more than three months. Bloomberg News reports:

China has allowed a 2.6 percent gain over the past three months, making it Asia’s best performer among the 10 most-active currencies in the region outside Japan.

Read More: Yuan Gains Most in 3 Months on Efforts to Curb Trade Surplus and China’s forex reserves hit 1.76 trillion dollars: report