CHINA’S foreign exchange reserves rose by US$118.9 billion in the first two months of the year to US$1.65 trillion, domestic media reported yesterday.

The reserves increased US$61.6 billion and US$57.3 billion in January and February respectively, the China Business News said, citing unnamed sources.

The country’s foreign exchange reserves, the world’s biggest, rose by 43.32 percent or US$461.9 billion last year to US$1.53 trillion, according to figures released by the central bank earlier.

A spokesman with the State Administration of Foreign Exchange declined to comment on the report when contacted by reporters yesterday.

Analysts pointed out the growth indicated hot money, or illegal speculative capital, was likely still coming in, attracted by China’s strong economic growth, appreciation of the yuan and relatively high interest rates.

“Hot money is playing a role and the overall growth in foreign exchange reserves is fairly fast,” Lu Feng, an economist with China Center for Economic Research, told reporters.

“It seems the authorities will need more time to cap foreign exchange reserves than they originally expected,” he said.

(SD-Agencies)