China’s foreign reserves fall for first quarter since 1998
CHINA’s foreign exchange reserves fell for the first quarter since 1998, during the Asian financial crisis, to $3.18 trillion in the last three months of 2011, new figures show.
Economists said the fall reflects capital outflows and increased investor interest in holding US dollars.
Reserves reached a peak of $3.27 trillion in October before beginning a slight drop.
They were boosted by strong foreign direct investment, big trade surpluses and inflows of short-term speculative funds in search of quick profits.
The stockpile has been rising as Beijing buys foreign currencies used to pay for the country's exports in order to control the value of the yuan.
Economists says the fall in reserves reflects capital outflows in the quarter due to expectations of a drop in the value of the yuan and increased investor interest in holding US dollars.