Interesting, we will see. Fluctuate may just mean revalue or fluctuate within a band.
China Reduces Dollars in Reserves, Increases Euros, Lehman Says
March 11 (Bloomberg) -- China's central bank cut the share of its currency reserves held in dollars and raised its holdings of euros, according to an estimate by Lehman Brothers Holdings Inc.
Seventy-six percent of China's reserves, the world's second- largest, were in dollars last year, down from 82 percent in 2003, Lehman said in an analysis yesterday of figures published by the People's Bank of China. Lehman is the fifth-largest U.S. securities firm. The rest are in euros, Lehman said.
The shift may make it harder for the U.S. economy to attract enough money to compensate for a record current-account deficit, Shruti Sood, a currency analyst at Lehman in London, wrote in the report. The dollar fell after Japanese Prime Minister Junichiro Koizumi said yesterday the country should consider diversifying its foreign currency holdings, the world's largest.
``It doesn't mean they are selling their holdings of dollars, but they are starting to diversify,'' Sood said in a telephone interview yesterday. Most of China's reserves are in ``short maturity'' debt like U.S. Treasury bills, she said. Its euro holdings are in German government debt maturing in a month, she said the study indicates.
China spent 1.6 trillion yuan ($193 billion) buying foreign currency in 2004 to maintain the yuan's fixed exchange rate at about 8.3 per dollar, 41 percent higher than 2003, the central bank said on Feb. 28. Foreign reserves rose to a record $610 billion, according to People's Bank of China figures.
Lehman predicts China will allow the yuan to fluctuate by the end of June. |
