China trims US Treasury holdings to avoid weak dollar, boosts euros - source
Friday, November 26, 2004 7:42:53 AM
http://www.afxpress.com
BEIJING (AFX) - China has reduced its holdings in US dollar assets and added to its positions in euros and other currencies as well as gold, in order to avoid the impact of the weakening dollar, a Chinese financial specialist told XFN-Asia. The specialist, who is close to central bank policy makers but declined to be identified by name, said that Beijing's holdings of Treasurys and other dollar assets had been trimmed
"This is indeed the case," the financial specialist. "This is related to the weakness in the dollar." The financial specialist said that the euro was the main beneficiary of the initial switch but a broader diversification had later been implemented to include the Swiss franc and gold
He declined to say when the trend began or whether it would continue
He did not estimate the current level of China's official US Treasury holdings and declined to comment on a report in the China Business News that holdings in US Treasurys had been cut to 180 bln usd
A central bank official could not confirm or deny the report
China's central bankers have talked of the need to diversify their holdings in recent years. US Treasurys have long formed the bulk of China's foreign exchange holdings. The Shanghai-based China Business News quoted Yu Yongding, a member of the monetary policy committee under the central bank, as saying the move was to avert further losses from dollar-denominated investments
Yu, who was speaking at a seminar at the Shanghai University of Finance & Economics, said China had particularly cut its holdings in US Treasury debt
The report did not give a comparative figure for US dollar holdings
But it said that dollar investments were 80 pct of China's foreign exchange holdings in the past. It added that most of those investments were in Treasurys
The dollar, under renewed pressure overnight, came under further selling in Asian trading after news of the report emerged
The euro climbed above 1.33 usd for the first time ever while sterling surged above 1.90 usd. China's end-September foreign exchange reserves stood at 514.5 bln usd
Euro hits record 1.3329 usd on report China has cut US bond buying
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26-11-2004 02:55
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