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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: RealMuLan who wrote (25038)	3/7/2005 10:14:19 AM
From: mishedlo	Read Replies (1) of 116555

China will not adjust dollar assets in forex holdings - report Sunday, March 6, 2005 6:51:48 AM forexstreet.com BEIJING (AFX) - China will not adjust the proportion of US dollar assets in its foreign exchange portfolio despite possible moves by other countries, the 21th Century Business Herald quoted a senior foreign exchange official as saying Guo Shuqing, head of the State Administration of Foreign Exchange (SAFE), told the newspaper that he was aware of statements by South Korea's central bank outlining adjustments to its foreign exchange portfolio but ruled out any such action by China He was referring to reports based on statements by the South Korean central bank last month outlining its diversification of foreign exchange reserves into non-state bonds. The reports led to a brief sell-off of the dollar and US dollar-denominated debt before South Korea stated that it was not proposing any fresh sales of dollar assets. South Korea has some 200 bln usd in foreign exchange reserves, with US dollar assets accounting for much of the total But Guo said: "There will not be any major changes in China's foreign exchange reserve portfolio, as our foreign trade is settled mostly in dollars, and we are unlikely to adjust the holding on the currency's short-term market movements." He also said: "Our forex reserves are very diversified already." Last December, SAFE publicly denied reports that it had significantly cut its dollar assets in its foreign exchange holdings. The reports triggered further selling of the dollar But analysts point out that despite the rhetoric, China's appetite for fresh US dollar assets such as treasury bonds is diminishing China had foreign exchange reserves of 609.9 bln usd at the end of last year, up 206.6 bln from the end of 2003, with dollar assets believed to account for some 56 pct

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