The pace was faster than the 4.9 percent decline recorded at the end of January.

The growth of forex savings, which was typically fast in recent years as forex assets owned by Chinese depositors expanded, started to slow down early last year and dipped to negative territory near year-end.

"Expectations that the renminbi will soon appreciate remain a major reason," said Wang Yuanhong, senior analyst with State Information Center.

"Many people still keep converting their forex assets into renminbi," he added.

Partly as a result, renminbi savings deposits continued to rise rapidly. The PBOC said earlier total savings, of which forex account for a small fraction, jumped by an annualized 18.6 percent to 11.63 trillion yuan (US$1.4 trillion) at the end of January.

Speculation over a revaluation of the yuan, largely prompted by pressures from countries like the United States that says the yuan is undervalued, ran higher this year. The Chinese Government has been reiterating its stance that it would not revalue the currency any time soon but will gradually improve the exchange rate forming mechanism.

Rumors about an immediate appreciation of the renminbi swirled last month as some foreign financial institutions predicted that the currency may appreciate by 5 percent within three months.

As forex savings kept falling, forex loans continued their fast growth as businesses increasingly opted to take on forex liabilities.

Outstanding forex loans at both Chinese banks and foreign banks operating here surged by 30.3 percent on a year-on-year basis to US$136.4 billion at the end of last month, which compares to 27.8 percent recorded one month earlier.

(China Daily March 12, 2004)