China's foreign exchange reserves surged to $1.9056 trillion by end-September 2008, up 32.92 per cent from the same period last year, the People's Bank of China said in a report published on its website.

The latest growth rate is, however, lower than the 35.73 per cent rise in June and the 47.7 per cent reported for the whole of 2007.

China, which overtook Japan to become the world's largest holder of forex reserves in February 2006, has seen a rapid growth in its foreign exchange reserves in recent years with its ballooning trade surplus.

The central bank said China's forex reserves, however, has been growing less rapidly since the beginning of this year, along with a shrinking trade surplus.

The country's trade surplus also narrowed 2.6 per cent year-on-year to $180.9 billion in the first three quarters, according to figures provided by the General Administration of Customs.

China's forex reserves rose $377.3 billion in the first three quarters. In September, the reserves expanded by $21.4 billion, compared with rises of $36 billion and $39 billion in July and August, respectively.

The monthly increase, which averaged $41.9 billion in the first nine months, was still higher than the $38.5 billion recorded last year.

Average monthly increase for the third quarter alone was $32 billion, and higher than market expectations.

China's trade surplus had been expanding by more than $27 billion each month in the third quarter, official figures showed.