China’s State Administration of Foreign Exchange has revised upward its estimate of the nation’s current account surplus for the first half, the Wall Street Journal reported. China’s current account surplus in the second quarter was US$72.9 billion, slightly higher than previous estimates and a 35% increase on last year’s level. The country’s foreign exchange regulator also warned that "hot money" inflows will likely continue into the second half and could present serious economic imbalances. The inflows are coming from investors seeking to capitalize on China’s higher interest rates and expected currency appreciation. Although China has capital controls in place, investors have found ways to bring in money via small trade and investment channels. The regulator said financial troubles in the eurozone may be preventing an even larger rise in fund inflows.
Categories