China dampens rumors about US dollars by Ioana Madalina Tantareanu

Sunday, China tried to put an end to speculations about the massive US dollar sell-off. Officials from the central bank stated that the dollar will remain in their foreign exchange reserves. US dollars and government bonds are "an important part of China's foreign reserve investments", according to an unnamed official with the People's Bank of China. The $1.3 trillion foreign exchange rezerve of China, is the largest in the world, and is comprised mainly of US dollars, potentially giving the nation big power over the dollar's value and currency markets. The Daily Telegraph quoting some Chinese officials, said China would dump its dollar holdings in the event of a trade war with Washington. Xinhua News Agency said the central banker's remarks were intended to counter unspecified reports in Western media that China "is threatening to carry out a sell-off of U.S. dollars." "China is a responsible investor in international financial markets, and our country's foreign exchange reserves are managed with the operational goals of safety, liquidity and profit," Xinhua added. The reserves have become a political issue both within China and between Beijing and Washington. As the dollar has fallen in value, the People's Bank has come under pressure to diversify its holdings to maintain the value of the reserves and improve returns. According to Wahington China undervalued it's currency to make exports cheap, and putting American manufacturers in disadvantage. In the past weeks, several US senators have renewed calls to punish Beijing if they won't let the yuan rise.

by Ioana Madalina Tantareanu for PocketNews (http://pocketnews.tv)

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