China's forex reserves hit new record high

(AFP)- China's foreign exchange reserves soared to a record $3.1975 trillion at the end of June, the central bank said Tuesday, highlighting concerns over inflation in the world's second biggest economy.

China's forex reserves have ballooned in recent years, fuelled by strong foreign investment, large trade surpluses and inflows of "hot money" -- short-term speculative funds in search of quick profits.

Foreign currencies earned by Chinese exporters are changed for yuan with the central bank so it can control the value of the currency.

The foreign exchange is added to China's growing coffers, while the yuan flow into the economy, adding to inflationary pressures.

Chinese Premier Wen Jiabao on Tuesday once again pledged that stabilising prices was still the main priority in the country's economy. Read more here…