Changes in foreign exchange rates and asset valuations contributed $71 billion to China's foreign exchange reserve growth in 2009, China's State Administration of Foreign Exchange (SAFE) said in a statement on Friday. It accounted for 15.7 percent of China's overall foreign exchange reserve growth of $453.1 billion in 2009 and provided a glimpse at part of the world's largest stockpile of foreign exchange reserves, which stood at $2.4 trillion by the end of last December.
SAFE said it will exclude changes in foreign exchange reserves caused by exchange rates, prices and other non-trade factors from the balance of payments (BOP) data, adding the agency will begin publishing such data on a quarterly basis from 2010. China does not disclose the full composition of its foreign reserve holdings, but analysts estimate that Beijing may have put about two-thirds of its foreign exchange reserves into dollar assets.
With the new SAFE numbers and quarterly forex reserve data from the People's Bank of China, analysts will at least know the quarterly changes in China's forex reserves that are caused by exchange rates and asset valuations. As the holder of the world's largest accumulation of foreign exchange reserves and as Washington's largest creditor, China is closely watched by global investors for any sign that it might start to veer away from its heavy purchases of dollar-denominated assets. "It is encouraging that China is becoming more and more transparent (about its forex reserves)," said Zhang Ming, an economist with the Chinese Academy of Social Sciences.
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