China’s forex reserves hit 1.76 trillion dollars: report

CEAT Kelani Holdings Managing Director Ravi Dadlani (right) and Lanka Ashok Leyland CEO Umesh Gautham exchange the OEM agreement

SHANGHAI, June 2, 2008 (AFP) – China’s foreign exchange reserves rose to 1.76 trillion dollars at the end of April, state media reported Monday, reaching a level higher than the rest of Northeast Asia’s combined. “This (figure) seems to suggest the inflow of hot money is speeding up,” the newspaper quoted Logan Wright, an analyst with Stone and McCarthy Research Associates, as saying.

China’s reserves, by far the largest in the world, expanded by another 74.5 billion dollars during April, the China Business News reported, equivalent to about 100 million dollars every hour.

At 1.76 trillion dollars, China’s reserves are now larger than those of Japan, Taiwan, South Korea and Hong Kong combined.

The growth in reserves came amid rising official concern about a fresh surge in hot money — or speculative inflows — spurred by a strengthening yuan and a widening spread between falling US interest rates and rising Chinese rates.

The increase in reserves was roughly three times larger than the trade surplus and the value of incoming foreign direct investment — the two traditional sources of reserve growth.

This led analysts to conclude that perhaps as much as 50 billion dollars entered the econom

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