Foreign Exchange News
- $700b appropriate size for forex reserves
Date: 20-Dec-2006 Sources: (Shenzhen Daily)
AN appropriate size for China's foreign exchange reserves would be about US$700 billion, a senior official from the China Banking Regulatory Commission (CBRC) said.
CBRC Vice Chairman Jiang Dingzhi also said some of the reserves should be used to invest in strategic resources, but didn't say which resources the country should buy.
China's foreign exchange reserves are the world's largest and recently exceeded US$1 trillion.
Jiang made the comments in a question and answer interview published on the Web site of the Study Times, a weekly newspaper produced by the Communist Party of China's cadre-training school.
Jiang said China should gradually improve the flexibility of the yuan, but that expectations of a yuan appreciation need to be discouraged to reduce speculative funds from flowing into the economy, according to the article.
In the interview, Jiang also said the country should slow the pace of companies listing overseas as one way to lessen the growth in foreign exchange reserves.
He also questioned China's current policy of investing the lion's share of its reserves in U.S. Treasuries, saying the return on U.S. government debt isn't very high.
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