China's forex reserves surge again

China's foreign exchange reserves, which exceeded Japan's as the world's biggest in February, last month surged by 32.8 percent over March last year to 875.1 billion U.S. dollars.

A People's Bank of China report published Friday said the reserves grew by 56.2 billion dollars in the first quarter of the year alone.

The figures were made known the day after the bank announced a raft of measures to allow businesses and individuals to hold more foreign currency.

The country is now under international pressure demanding it to ease controls.

China requires its companies to sell to the government a part of the foreign currency that they earn abroad, and travelers are allowed to take a small amount out of the country.

The measures have forced the government to pile up huge foreign exchange reserves to control the export-fueled flood of money into the country and reduce inflationary pressure.

The government has been taking measures to free up foreign exchange controls, but the package announced Thursday is the most sweeping and profound, ranging from greatly facilitating the purchase of foreign exchange by enterprises and individuals to allowing individuals to obtain an equivalent of 20,000 U.S. dollars a year.

China has been under pressure from the United States and other trading partners to ease controls that they say keep the yuan undervalued and give an "unfair" price advantage to Chinese exporters at the expense of foreign competitors.

The yuan was revalued by two percent last July to 8.11 against the U.S. dollar, and the bank announced the central parity rate for the currency was 8.0163 versus the dollar on Friday.

The Renminbi debate flared up ahead of a visit by President Hu Jintao to Washington next week when U.S. President George W. Bush said Thursday he hoped to discuss the dispute and China's trade surplus with the U.S..

The People's Bank report showed China's financial industry was "running smoothly".

By the end of March, outstanding M2, or the broadest measure of money supply,rose to 31.05 trillion yuan, jumping 18.8 percent from a year earlier.

Renminbi-denominated loans added 1.26 trillion yuan in the first three months, an increase of 519.3 billion yuan over a year ago.

Source: Xinhua