China's foreign exchange reserves will not endlessly decrease and will be maintained at an appropriate level, said Yi Gang, vice-governor of the People's Bank of China, on Sunday.

The reserves went

down by about $500 billion in 2015 to hit $3.3 trillion by the end of the year, compared with $3.99 trillion at the peak in 2014. Yi said the fall is attributable mainly to increased holdings of dollar assets, repayment of foreign debts and overseas investment and cross-border payments by Chinese enterprises and individuals as well as the rising value of the US dollar.

"Such adjustments in corporate and individual balance sheets will not be limitless and after the adjustments, it (foreign exchange reserve level) will be back to normal," he said on the sidelines of the two sessions, the annual meetings of legislators and policy advisors.

Yi said there could be some "extra" capital inflows as China's foreign exchange reserves increased in past years, referring to speculative capital. "It will not be surprising if such capital flows out of China at some point," he said.

The yuan will be basically stable at an appropriate level, he said, adding that there is no basis for sustained yuan depreciation given China's stable growth trend, improving labor productivity, massive current account surpluses, increasing foreign and outbound investment and ample foreign exchange reserves.

Yi also said the central bank will continue to improve the interest rate transmission mechanism and properly guide the market level of interest rate.

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