I was more than surprised when I learned that Cheng Siwei, amongst other functions vice-chairman of the Standing Committee of the National People's Congress and dean of the business school of the Chinese Academy of Sciences, publicly announced that China should exchange its 1.43 trillion reserves in US dollars for stronger currencies.
According to Market Watch:
Most analysts said that Cheng, who is notorious for his off-the-cuff, market-moving remarks, was probably not expressing official policy. A rapidly plunging dollar isn't in China's best interest, because it erodes the return on the country's massive holdings of dollar-denominated assets.Of course anybody who is right in his head and living outside of the US, will have sold as much as possible of the US dollars. But when a representative of the largest owner of US dollars is going public in saying that, he creates a problem. Of course, the US dollar started to drop like crazy against the Euro. Curious about the strategy behind all this, if any.
3 comments:
uoops. I´d sell my dollars too, in order to help the dive!
Gee. Then we wouldn't be able to buy that cheap Chinese toothpaste and leaden toys. Has anybody investigated whether this turkey had a position on?
Cheng Siwei is a high rank official. As the post states, he isno the official voice of the government, but he is the chairman of a minor political party in China (yes, there are other parties! but they are all subordinated to the CPC).
So this was a smart move, and the party is not to blame.
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