China's central bank said it spent US$195bn buying foreign currency in 2004 to maintain the yuan against the US dollar, an increase of 40% from 2003. The outlay led to a net drain of RMB669bn from the banking system last year, well over twice the RMB282bn in 2003. China has managed to keep the yuan propped between 8.276 to 8.28 against the dollar, but the currency is under pressure to rise because of widespread speculation and investment inflows. Turnover on the China Foreign Exchange Trade System, which trades various foreign currencies against the yuan, rose 38% to a record US$209bn last year, according to exchange data.
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