China’s foreign exchange reserves increased by US$74.46 billion in April to reach US$1.75 trillion, Reuters reported, citing sources famiiar with the situation. The increase, more than triple the US$24.3 billion that entered China during the period through its trade surplus and foreign direct investment, is said to be an indication of large, ongoing hot money inflows. A State Council economist earlier called for keeping the yuan stable to discourage speculative capital. However, the increase in April came during a month that saw the yuan’s appreciation slow. Some economists have downplayed the hot money link, attributing most of the increase in forex reserves to valuation changes on non-dollar holdings.
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