Chinese official backs dollar assets
A Chinese central bank official said the dollar remained a mainstay of China’s foreign exchange reserves as Beijing sought to damp speculation that it would sell off dollar assets.
In an interview carried Sunday by the government’s Xinhua News Agency, an unidentified official with the People’s Bank of China said U.S. dollars and Treasury bonds were “an important part of China’s foreign reserve investments.”
China’s $1.3 trillion in foreign exchange reserves are the world’s largest and believed to consist largely of dollar assets, potentially giving Beijing huge sway over the dollar’s value in currency markets worldwide.
Xinhua said the central banker’s remarks were intended to counter unspecified reports in Western media that China was “threatening to carry out a sell-off of U.S. dollars.”
A British newspaper last week reported that Chinese government economists had said China would dump dollar holdings in the event of a trade war with Washington.
Xinhua’s report was posted prominently on the main government website, signaling that Beijing wanted to stress a commitment to hold dollar assets.
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