Yesterday, the Forex Blog reported that Central Banks and Sovereign
Wealth Funds appear to be losing confidence in the Dollar. To follow up
with a specific example, a high-ranking Chinese policymaker recently
suggested that China should move spend some of its reserves since they
are rapidly losing value in RMB terms. The official offered that a
portion be used to purchase foreign energy assets, in order to mitigate
against both the falling Dollar and rising oil. There is clearly a trend
among institutional holders of Dollars to use the currency to purchase
US assets. Witness the recent (separate) sales of the Chrysler and GM
Buildings to Middle Eastern buyers. With nearly $2 Trillion in foreign
exchange reserves, however, China is in a class by itself, and any
indication of its frustration with the Dollar should be taken very
seriously.
Read More: China Considering Using Forex Reserves
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