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No cut in dollar reserve holding: Central bank
Updated: 2006-03-06 15:38
The country will not reduce its holdings of U.S. dollar-denominated assets in
its foreign exchange reserves, central bank chief Zhou Xiaochuan said yesterday.
However, Zhou, governor of the People's Bank of China, did not say whether
the proportion of U.S. dollars in the reserves would rise or fall.
China's central
bank governor Zhou Xiaochuan speaks in this undated file photo. Zhou
said that China will not reduce its holdings of U.S.
dollar-denominated assets in its foreign exchange reserves March 5, 2006.
[Xinhua]
| Zhou said there had been market speculation that China might reduce its U.S.
dollar holdings.
“The foreign exchange reserves are still growing. Some people are concerned
that the amount of U.S. dollar assets in the reserves will fall. But that's not
the case,” Zhou said.
China had US$818.9 billion in reserves at the end of 2005. It does not
disclose the composition of the stockpile.
Zhou said China would adjust the mix of its reserves in light of global
market conditions. In doing so, China's criteria would be safety, liquidity and
profitability, in that order. He did not elaborate.
The Securities Times quoted an influential economics professor as saying
Friday that China has three times more foreign exchange reserves than it needs
and should cut them accordingly.
“China's foreign exchange reserves hit US$818.9 billion at the end of last
year, but they should not exceed US$250 billion,” Beijing University professor
Xiao Zhuoji told the paper in an interview.
The government should also ease its control on foreign exchange and make
better use of the reserves, which are predominantly invested in short-term U.S.
treasury bills with low returns, Xiao added.
“That's like allowing foreign countries to use our money cheaply,” he said.
In similar remarks published by domestic media last month, Xiao proposed
reducing the dollar share of the reserves to curb risks posed by the instability
of the U.S. currency.
(Source: Shenzhen Daily/Agencies)
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