China must invest massive FOREX in resources - Bank of China
Friday, 08 Jan 2010
According to a central bank official, China must invest its massive foreign exchange reserves in oil and other strategic resources as part of its drive to diversify away from dollar assets.
Mr Sheng Songcheng director of a municipal branch of the People's Bank of China in Shenyang city said that such investments should be made by professional investment firms, which could purchase forex from the central bank.
China has to an extent, already been moving in this direction. China Investment Corp, the country's sovereign wealth fund, was relatively aggressive last year in buying into foreign commodities companies. State-owned companies have also pursued a range of mining and oil acquisitions and partnerships abroad.
Mr Sheng played down worries about China's rapid build up of foreign exchange reserves saying that this was a natural consequence of economic growth.
He added that "It is true that a surge in foreign exchange reserves will raise pressure for yuan appreciation, but a rise in the yuan depends on many other factors.”
China's foreign exchange reserves have continued to grow in recent months, albeit at a slower pace than in past years, as it still has a large trade surplus and significant foreign investment.
Its reserves, the world's largest such stockpile, stood at USD 2.27 trillion at the end of September. Analysts estimated that roughly two thirds were invested in dollar denominated assets.
(Sourced from Reuters)
Friday, 08 Jan 2010
According to a central bank official, China must invest its massive foreign exchange reserves in oil and other strategic resources as part of its drive to diversify away from dollar assets.
Mr Sheng Songcheng director of a municipal branch of the People's Bank of China in Shenyang city said that such investments should be made by professional investment firms, which could purchase forex from the central bank.
China has to an extent, already been moving in this direction. China Investment Corp, the country's sovereign wealth fund, was relatively aggressive last year in buying into foreign commodities companies. State-owned companies have also pursued a range of mining and oil acquisitions and partnerships abroad.
Mr Sheng played down worries about China's rapid build up of foreign exchange reserves saying that this was a natural consequence of economic growth.
He added that "It is true that a surge in foreign exchange reserves will raise pressure for yuan appreciation, but a rise in the yuan depends on many other factors.”
China's foreign exchange reserves have continued to grow in recent months, albeit at a slower pace than in past years, as it still has a large trade surplus and significant foreign investment.
Its reserves, the world's largest such stockpile, stood at USD 2.27 trillion at the end of September. Analysts estimated that roughly two thirds were invested in dollar denominated assets.
(Sourced from Reuters)