It was probably inevitable: China’s foreign exchange reserves are now the largest in the world, having recently surpassed $850 Billion. The reserves are both a product of China’s massive current account surplus and the $100 Billion+ that the nation attracts in foreign investment each year. Further, experts do not expect China to slow its accumulation of reserves, which may reach $1 Trillion by the end of the year. As the majority of China’s forex reserves are held in USD-denominated assets, any slight appreciation of the Yuan causes a relative depreciation in the value of its reserves. Rediff.com reports:

China’s forex reserves maintained an upward growing trend and would be beneficial to maintain the nation’s and its enterprises’ external credit and the stability of financial structure and to prevent and resolve international financial risks.

Read More: China’s forex reserves = $853.7 billion!