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China funds new forex investment agency

AlfredSokol said: "China has pumped $80 billion into a new [url=http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/296667/1/.html]forex investment agency[/url]. [quote] The Ministry of Finance was to issue on Wednesday 600 billion yuan (79.4 billion US dollars) as part of the planned special treasury bonds sale totalling 1.55 trillion yuan, said the China Securities Journal. Proceeds of the bond issue, authorised by China's parliament in late June, will be injected into the new state forex investment agency, tasked with diversifying and maximising returns on part of the country's huge forex reserves. The bonds carried yields of 4.3 per cent with maturities of ten years, according to the official Chinabond website. The Agricultural Bank of China will act as middleman in channelling the first batch of special treasury bonds from the ministry to the central bank, it added. [/quote] China currently has the largest forex reserves in the world."

newinvestor123 said: "China diversifying FOREX reserves = Selling dollars, which almost all of their holdings are denominated in."

AlfredSokol said: "So what? If they sell them it means someone else buys them."

newinvestor123 said: "True - But people have also been buying homebuilders all the way down from their peaks two years ago, and the dollar on it's way down for the last five. Supply and demand, old boy."

Pb3190 said: "If they are selling them, they must not have as much faith in the dollar as they have in the past. True, someone is buying them, but at what price?"

AlfredSokol said: "I'm going to see if I can find the price. Don't forget, they could also just be looking to diversify. 70% of their forex is in US cash right now."

Pb3190 said: "With that much in the dollar, I would move some into the Euro or GBP for the long run. Or if they plan to stop manipulating their own currency any time soon, they might want some of their own stuff!"

squarepusher said: "amero! amero! amero! amero!"

newinvestor123 said: "Well, as we all know, holding 70% of your assets in any one investment makes absolutely no sense at all. Diversification is the name of the game, so why hasn't China diversified their dollar holdings, even in the face of a continued decline of the dollar? Because they want to maintain the option of a fire sale - They want to maintain their bargaining chip with the US - Because they know what's coming, and they are planning for it. They are planning on being the next world superpower, and holding 30% of our debt is just a part of their plan."