Fears of a possible yuan devaluation has caused mainland residents and companies to accumulate massive amounts of US dollars, with their foreign currency holdings more than tripling to about US$80 billion for the year to August.The figure, which caught many analysts by surprise, compares with Hong Kong's foreign exchange reserves of $92.1 billion at the end of August and Beijing's holdings of $140 billion. This is the first time Beijing has quantified the magnitude of the hoarding of foreign exchange and illegal evasion of hard currency controls due to fears of a yuan devaluation. Wu Xiaoling, director-general of the State Administration of Foreign Exchange (Safe), yesterday said a series of tough measures released in the past few weeks would stem the capital flight and ensure currency stability. However, she said the measures did not mean Beijing would go back to the old days of complete foreign exchange control, adding that convertibility under the current account would remain. She also ruled out a yuan devaluation, saying it would do more harm than good. She confirmed Safe had ordered companies to repatriate forex they hold abroad by tomorrow or face punishment. 'This is nothing new. All Chinese legal persons are required to keep their foreign exchange within China. This has always been the rule but some companies have failed to comply,' she said. 'If they comply by October 1, they will not be punished. If not, they will be punished.' She declined to say how much illegal foreign currency mainlanders hold abroad, although foreign estimates say about $16 billion has left the country annually in the past three years. Ms Wu said Beijing had no need or intention to devalue. 'The level of the renminbi [yuan] is decided not by the market but by economic fundamentals. We have a surplus in the current and capital accounts. We have US$140 billion in foreign exchange reserves . . . individuals hold [an additional] US$80 billion in foreign currency . . . why should we devalue?' Asked if Beijing would devalue the yuan next year, she said: 'No one can guarantee that a currency will or will not be devalued. We should look at the reasons . . . if we devalued, it would put more pressure on our foreign debt and investors would remit their profits. 'It would dampen confidence in the currency and the economy. A big country cannot rely on a devaluation to revitalise its economy but must increase domestic demand.' Beijing seems to have been surprised by the extent of fraud among companies. Since the start of the year, officials have been promising no devaluation of the yuan. Nevertheless, thousands of citizens searched for ways to obtain foreign exchange. She also said Beijing lost 'several billion US dollars' through fake customs documents so far this year. By mid-year, the discrepancy between a large trade surplus and almost no increase in forex reserves made it clear to the authorities that billions of dollars had gone missing. Ms Wu blamed this discrepancy on the customs frauds, US$4 billion in loans to Thailand and Indonesia and trading firms retaining 15 per cent of export earnings as they have been entitled to since last October as well as more money going into forex accounts.