Hi Jay, Message 17770802 , and as you were posting ...
<<The big picture is that the small country China probably intends to lighten up reserve allocation of USD, from current>>
... it has started
biz.scmp.com
Monday, July 22, 2002
Beijing boosts euro holdings as dollar slides
MARK O'NEILL in Beijing
In response to the depreciating US dollar, China has reduced the proportion of greenbacks in its foreign exchange reserves in favour of euros.
However, the dollar still accounts for about 60 per cent of reserves.
At the end of last month, foreign exchange reserves stood at US$242.76 billion, up a year on year 34.2 per cent and an increase of US$30.6 billion in six months.
Yesterday, the 21st Century Business Herald reported Beijing this year raised the proportion of euros to 20 per cent from 15 per cent at the end of last year. About 10 per cent of reserves is held in yen and the rest in Swiss francs and British pounds.
In April, the reserves rose by a value of US$6 billion but the share of US dollars fell by US$2.1 billion as Beijing switched to other currencies.
The newspaper quoted a report from the Bank of International Settlements (BIS) as saying that, between 1999 and last year, China had bought more than US$80 billion worth of US dollar instruments - US$23.3 billion in Treasury bonds, US$8 billion company bonds and US$53.1 billion institutional bonds.
The reserves are handled by a management company under the State Administration of Foreign Exchange Reserves, with a small portion entrusted to foreign managers, as a way of helping to learn international methods of managing capital and controlling risk.
A year ago, in a speech at Qinghua University, Premier Zhu Rongji said China's foreign reserves earned between US$6 billion and US$7 billion in interest each year.
In recent years, the amount of foreign exchange in the hands of companies and individuals has soared.
According to the BIS report, at the end of last year, mainland individuals held foreign exchange worth US$81.6 billion, up nearly nine-fold from the level at the end of 1992, while companies held US$45.3 billion, up from US$26.7 billion at the end of 1993.
Many individuals, especially the heads of private companies, are uncertain about the stability of the yuan and prefer to keep their money in foreign currency. About 80 per cent of these individual reserves are in US dollars.
The report did not say whether the national figure for reserves included those held by individuals and companies.
Mainland reserves, the world's second-largest after Japan, have been boosted by China's favourable balance of payments, mainly its soaring trade surplus, analysts say.
Rising forex reserves are a pillar for the stability of the yuan, which is convertible only on the current account. Analysts say full convertibility is at least five years away.
China repeatedly says it will keep its currency stable.
[EDIT: Code phrase for 'Stable against the USDollar'] |
