China’s foreign exchange reserves rise

BEIJING — China’s foreign reserves reached $2.45 trillion by the end of June, a 15.1 per cent increase year on year, the central bank said Sunday.

BEIJING — China’s foreign reserves reached $2.45 trillion by the end of June, a 15.1 per cent increase year on year, the central bank said Sunday.

However, its reserves increased by only $7.2 billion in the second quarter, a sharp drop from the first quarter when it grew by $47.9 billion, according to the People’s Bank of China. In the last quarter of 2009, reserves surged by $126.5 billion dollars.

The declining euro is a major reason behind the slowing growth of foreign reserves, said the central bank. The exchange rate between the euro and the U.S. dollar had fallen by nearly 20 per cent between the end of 2009 and this May, according to the bank.

The reserves are closely watched in the United States, where China recycles its trade surpluses by buying Treasury securities and other government debt.

It took China a decade to accumulate its first $1 trillion in foreign reserves — which it reached in 2006. But growth has since skyrocketed as trade boomed and the total passed $2 trillion last April. It surged to $2.4 trillion by the end of 2009.

China is the U.S. government’s biggest foreign creditor but has trimmed its Treasury holdings by several billion dollars in recent months.