The People's Bank of China (PBC), the central bank, is expected
to raise the required reserve ratio of foreign-currency deposits
from 4 percent to 5 percent as of May 15, the China Securities
Journal quoted sources as saying on Wednesday.
March figures showed that Chinese financial institutions held
US$165 billion in foreign currency deposits at the end of the
month. This new rise will force banks to accumulate a further
US$1.65 billion by May.
The PBOC's press office declined to comment on the announcement
as experts put forward that such a move would target a decrease in
financial liquidity in foreign currencies.
With more control measures overseeing renminbi loans, companies
have turned to foreign currency loans to compensate. The latter
nationwide totaled over US$171 billion by the end of March, a 11.24
percent rise year-on-year. New loans taken out during the month
itself amounted to US$2.7 billion, up 800 million from
February.
To rein in excessive liquidity and cool the booming economy, the
PBC announced on April 29 that the renminbi reserve ratio would be
raised by 0.5 percent from May 15 – the seventh consecutive rise in
2007. A rise in the ratio for foreign currency would also help ease
appreciation of the Renminbi which registered its best-ever rate
against the dollar on Tuesday, standing at 7.6951 yuan.
(Xinhua News Agency May 10, 2007)