China Feb FX reserves hit $1.65 trillion-sources

China's foreign exchange reserves jumped $57.3 billion in February to $1.6471 trillion, almost matching January's surprising leap of $61.6 billion, two sources familiar with the data told Reuters on Friday.

The figures will fan talk of a continued surge in speculative hot money coming into China because the increase is more than three times greater than February's combined inflows from the trade surplus and foreign direct investment (FDI).

The sources declined to be identified because they are not allowed to speak officially to the media.

Economists have offered various explanations for the $61.6 billion jump in reserves in January to $1.5898 trillion. These include speculative inflows, an increase in onshore dollar lending and more active trading in onshore currency forwards.

Whatever the reason, the pace of accumulation in the first two months dwarfs last year's average monthly increase in China's reserves of $38.5 billion.

The reserves, the world's largest, have ballooned because the People's Bank of China, in order to hold down the yuan, buys most of the dollars that flow into China.

The central bank then has to sterilise the impact on the money supply by mopping up the domestic currency it creates in the process.

The PBOC publishes the reserves data every quarter. The next figures are due in April.