NEW DELHI: China's central bank said on Saturday that its foreign exchange reserves rose 16 percent year-on-year to $1.9537 trillion by the end
of March. On the other hand, India's forex reserves stood at $255 billion.
China's reserves, already the world's largest, increased by $7.7 billion in the first quarter - $146.2 billion less than the same period last year, AP reported quoting the People's Bank of China's Web site. In case of India, inflows by foreign institutional investors (FIIs) and a weak dollar have pushed up forex reserves by $2.8 billion.
Easing credit growth has also resulted in a lower growth in money supply. This is because a dip in loans slows down the ‘multiplier effect’ , which occurs when money lent by a bank is spent and comes back to the banking system in the form of new deposits creating fresh money.
Analysts believe China holds up to 70 percent of its foreign reserves in US dollar-denominated assets, including Treasury securities.
According to figures released by the Reserve Bank of India foreign currency assets rose $3 billion, the value of gold in reserves dipped $169 million. The level of special drawing rights - currency with the International Monetary Fund (IMF) - remained unchanged during the week.
China's reserves have ballooned as the central bank buys up dollars generated from its huge trade and influx of foreign investment.
While China's economy has slowed due to a plunge in trade and a slump in the domestic real estate industry, recent data show the drop eased in March.
Beijing has taken steps to hold down the price of exports by cutting taxes on exporters and stopping the rise of China's tightly controlled currency, the yuan, against the U.S. dollar. Economists say both steps could strain relations with trading partners if China is seen to be competing unfairly.
AP stated that Chinese exports fell 17 percent in March from a year earlier, the fifth straight monthly decline but less severe than February's 25.7 plunge, the sharpest in a decade, the customs agency reported Friday. It said trade "showed clear signs of improvement."
Imports fell by 25.7 percent, widening the Chinese trade surplus to $18.6 billion from February's $4.8 billion gap.
Back home, the total stock of money - cash currency and deposits - in the system rose Rs 1,01,8906 crore, or 2.2%, during the fortnight ended March 27 to touch Rs 47,57,905 crore. While currency with the public dipped Rs 3,939 crore, demand and term deposits rose Rs 48,584 core and Rs 58,985 crore, respectively.
Source : The Economic Times