China's forex reserves drop

Updated: 2012-01-13 22:57


  Print Mail Large Medium  Small 分享按钮 0

Zhang Ming, an international finance expert with the Chinese Academy of Social Sciences, predicted that overseas short-term capital will continue to flow out of newly emerging economies in the first half of this year.

In the first half of last year, rising yuan funds were a problem for the nation's monetary authorities, complicating their task of introducing policies to steady economic growth and control inflation. By purchasing foreign currencies, the central bank releases an equivalent value of yuan funds into the domestic market, which leads to increased liquidity.

However, the continuous decrease of yuan funds, and especially the sharp decline registered in December, sparked speculation of further loosening of monetary policies as inflation eased to 4.1 percent last month, the slowest rise in 15 months.

To replenish liquidity in the country's banking system as inflation eased, the central bank on December 5 lowered banks' reserve requirement ratio by 50 basis points for the first time in three years.

Previous Page 1 2 Next Page