BEIJING, Sept 27 China's stockpile of foreign exchange reserves rose to between $ 1.40 tr

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BEIJING, Sept 27 (Reuters) China's stockpile of foreign exchange reserves rose to between $1.40 trillion and $1.41 trillion at the end of August from $1.38 trillion at the end of July, a senior official said on Thursday.

Zhang Xiaoqiang, a vice minister of the National Development and Reform Commission, China's planning agency, was speaking to reporters after a news conference.

August's rise of $20-30 billion is much slower than the average increase of $45 billion a month in the first seven months of the year. The stockpile stood at $1.066.3 trillion at the end of 2006.

China officially announces its reserves once a quarter.

Zhang, who disclosed earlier this month that the reserves were almost $1.4 trillion at the end of July, gave no reason for the apparent slowdown.

China recorded a trade surplus of $25 billion in August, the second-biggest on record. Foreign direct investment was steady at $5 billion.

One possible reason is that ''hot-money'' inflows, which had been buoying the reserves, suddenly dried up.

Another explanation might be do with accounting changes linked to the initial capitalisation of China's fledgling sovereign wealth fund.

The Ministry of Finance issued 600 billion yuan of bonds at the end of August to the People's Bank of China, which transferred in return a corresponding amount of foreign currency assets to the fund, China Investment Co.

The fund, which has a remit to increase returns on China's reserves by investing in a broader range of riskier assets, is due to formally open for business on Saturday, according to state media.

REUTERS PBB RK1201

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