Currency holdings rose 32.9 percent at the end of September from a year earlier, the People’s Bank of China said on its Web site Tuesday. The increase of about US$97 billion over the quarter was down from a US$126.6 billion gain in the previous three months.

China has cut interest rates twice in the past month to stimulate growth as the worst financial crisis since the Great Depression dims the outlook for exports. The world’s fourth- biggest economy can still expand 10 percent this year and 9 percent in 2009, central bank Deputy Governor Yi Gang said Oct. 11 in Washington.

“Close to US$2 trillion in foreign reserves provides China with a strong foundation and more room to adjust policies to enable it to maintain relatively fast growth,” said Isaac Meng, senior economist at BNP Paribas SA in Beijing.

The yuan fell to 6.8390 against the dollar as of 5:30 p.m. in Shanghai, from 6.8360 before the data was released.

Smaller increases in the reserves — down from a record US$153.9 billion gain in the first quarter — suggest money is leaving the country as companies free up cash because of the credit crunch, said Lu Zhengwei, chief economist at Industrial Bank Co. in Shanghai.

The increase for September alone was only US$21.4 billion even after a record trade surplus added US$29.3 billion and figures for foreign direct investment suggested another US$6.6 billion entered the country.

China has stalled the yuan’s gains against the dollar since mid-July. That step, along with rate cuts and crackdowns on illegal channels for investment, may have stemmed inflows of so- called hot money, or speculative capital, and triggered outflows.

Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong, said US$10 billion to $20 billion of that money may be leaving each month.

That contrasts with the estimate of Michael Pettis, a finance professor at Peking University, that more than US$200 billion flooded in during the first half.

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