China's foreign exchange reserves show 16% rise

China’s central bank said today that its foreign exchange reserves rose 16% year-on-year to US$1.9537tn by the end of March.

China’s reserves, already the world’s largest, increased by US$7.7bn in the first quarter – US$146.2bn less than the same period last year, the People’s Bank of China said.

That rise was substantially less than the fourth quarter increase of almost US$45bn, according to China’s official Xinhua News Agency, showing the impact of slowing exports due to the financial crisis.

In March, the reserves increased by US$41.7bn, it said, US$6.7bn more than the same period last year.

Analysts believe China holds up to 70% of its foreign reserves in US dollar-denominated assets, including Treasury securities.

China’s reserves have ballooned as the central bank buys up dollars generated from its huge trade and influx of foreign investment.

While China’s economy has slowed due to a plunge in trade and a slump in the domestic real estate industry, recent data show the drop eased in March.