China raises banks'' reserve requirements to curb inflationnews
13 October 2007
Mumbai: The People''s Bank of China has ordered commercial banks to set aside more money as reserves, for an eighth time this year, to curb speculation in real estate and stocks and curb inflation.

The central bank has asked banks to park 13 per cent of deposits as reserves from October 25, up from 12.5 per cent. This is the highest in almost a decade.

Seven increases in the reserve requirement and five interest-rate rises this year alone have failed to stop the economy expanding faster than 11 per cent for a third quarter. Surging exports have pumped money into the world''s fastest-growing major economy, fanning inflation to the highest in 10 years and fueling a boom in shares and real estate.

China''s consumer prices surged 6.5 per cent in August from a year earlier, the biggest jump since December 1996. The rate breached the government''s annual 3 per cent target for a fourth consecutive month, as food costs soared.

China''s trade surplus jumped 56 per cent in September, the customs bureau said, taking it to $185.65 billion for the first nine months of the year, more than the $177.5 billion for all of last year.

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China raises banks'' reserve requirements to curb inflation