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Dollars dominate forex assets
By Zhang Fengming |
September 4, 2010, Saturday
|
Print Edition
Print Edition
FOR the first time, China has disclosed its allocation of foreign exchange reserves: 65 percent in United States dollars, 26 percent in euros, 5 percent in pounds and 3 percent in yen.
China's foreign exchange allocation has been a long-standing state secret. Yesterday's disclosure confirmed what analysts had long guessed -- that a large proportion of the country's foreign assets is in the currency of the world's biggest economic power.
China's foreign reserve is already the world's biggest at US$2.45 trillion, a treasure chest that was rapidly accumulated through trade and foreign direct investment. What China does with this huge reserve is of great curiosity worldwide.
The breakdown was reported yesterday by China Securities Journal, citing reserve managers it didn't name. The State Administration of Foreign Exchange was not available for comment.
In related news, a central bank official noted yesterday that developing countries are facing risks of depreciation on their foreign reserves.
Hu Xiaolian, deputy governor of the People's Bank of China, wrote in an article that sharp depreciation is possible for developing countries once a reserve currency's value becomes unstable. In China Finance, a magazine affiliated with the central bank, she wrote that a global financial system dominated by a single currency carries disadvantages, especially for developing countries.
Developing countries are vulnerable to global currency fluctuations, she said. "A diversified global currency system would be more conducive to international economic and financial stability," Hu said.
China in June widely expanded cross-border yuan settlement to 20 provinces and municipalities as well as four south China's Guangdong Province cities. The new list includes Beijing and provinces of Jiangsu, Zhejiang, Fujian, Shandong and Sichuan.
The trial also expanded from trade in products to trade in services in all markets and lifted a previous limit on overseas coverage. Previously, the trial had been restricted to settle trade with counterparts in Hong Kong and Macau special administrative regions and the 10-member Association of Southeast Asian Nations.
China has been asserting itself in the global financial arena and seeking a diversified global currency system.
China's foreign exchange allocation has been a long-standing state secret. Yesterday's disclosure confirmed what analysts had long guessed -- that a large proportion of the country's foreign assets is in the currency of the world's biggest economic power.
China's foreign reserve is already the world's biggest at US$2.45 trillion, a treasure chest that was rapidly accumulated through trade and foreign direct investment. What China does with this huge reserve is of great curiosity worldwide.
The breakdown was reported yesterday by China Securities Journal, citing reserve managers it didn't name. The State Administration of Foreign Exchange was not available for comment.
In related news, a central bank official noted yesterday that developing countries are facing risks of depreciation on their foreign reserves.
Hu Xiaolian, deputy governor of the People's Bank of China, wrote in an article that sharp depreciation is possible for developing countries once a reserve currency's value becomes unstable. In China Finance, a magazine affiliated with the central bank, she wrote that a global financial system dominated by a single currency carries disadvantages, especially for developing countries.
Developing countries are vulnerable to global currency fluctuations, she said. "A diversified global currency system would be more conducive to international economic and financial stability," Hu said.
China in June widely expanded cross-border yuan settlement to 20 provinces and municipalities as well as four south China's Guangdong Province cities. The new list includes Beijing and provinces of Jiangsu, Zhejiang, Fujian, Shandong and Sichuan.
The trial also expanded from trade in products to trade in services in all markets and lifted a previous limit on overseas coverage. Previously, the trial had been restricted to settle trade with counterparts in Hong Kong and Macau special administrative regions and the 10-member Association of Southeast Asian Nations.
China has been asserting itself in the global financial arena and seeking a diversified global currency system.
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