China’s huge currency reserves could mount pressure on prices

CHINESE Premier Li Keqiang reportedly voiced concerns about the country’s enormous foreign exchange holdings this weekend, worrying that they could drive up price inflation.

During a trip to Kenya, Chinese media reported that Li Keqiang had warned that the country’s reserves, which are the largest in the world, could become “a big burden”.

The Chinese government has acquired $3.95 trillion (£2.35 trillion) in foreign currency holdings, attempting to alter the value of their own yuan by selling more of it.

Some analysts believe this will drive up inflation, since it increases the amount of the currency circulating in the economy.