China’s foreign exchange reserve increased $417.8 billion in 2008, $44.1 billion less than the increase in 2007, the People’s Bank of China, the central bank, announced Tuesday.
This is the first time China has seen a decline in the growth of its foreign exchange reserve since 1998, reports newswire Xinhua. The foreign exchange reserve increased nearly $45 billion in the Q4 to $1.95 trillion by the end of 2008, the central bank said in a report.
The reserve growth had been slowing in 2008. The total foreign exchange reserve at the end of 2008 was up 27.34% from the end of 2007. The growth rate from Jan. to Sept. was 32.92% and that from January to June 35.37%.
“The reserves decreased in October and November as the increased amount in December outnumbers that in the last quarter,” said Guo Tianyong, professor with the Central University of Finance and Economics. According to Guo, expectation for a weaker yuan and extraction of capital from the Chinese market to ease capital supply pressure in the West were major factors leading to the decrease of foreign exchange reserves in the fourth quarter. (people.com.cn)