China spends US$195b maintaining yuan peg

The People's Bank of China spent 1.61 trillion yuan (US$195 billion) buying foreign currency last year to maintain the yuan's peg with the dollar, a rise of 40 per cent over 2003.

The People's Bank of China also drained 669 billion yuan from the banking system via open market operations last year, more than double the 282 billion yuan used in 2003, Xinhua news agency said, citing a central bank report.

"The central bank faces comparatively large pressure in the management of money flow and

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